Phil Trammell on economic growth under transformative AI

Abstract

This article explores how the advent of transformative artificial intelligence (AI) might impact economic growth. AI is considered as a technology shock that can increase the stock of technology, substituting for labor, and increasing the rate of discovery. The article highlights the potential for AI to significantly raise the growth rate of the economy, but cautions that this might also lead to a substantial decline in the labor share of income and a rise in inequality. It also discusses the concept of “fishing out” of ideas, a situation where advancements in technology become more costly due to diminishing returns, and argues that AI’s impact on the “research feedback parameter” will be crucial in determining its long-term impact on growth. – AI-generated abstract.