Artificial Intelligence and the Economy

Question 1: What will be the implications of recent developments in AI on global economic growth, as they mature over the upcoming decade?

Question 2: What will be the implications of recent developments in AI on unemployment in high income countries over the upcoming decade?

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How the experts responded

Question 1

Participant Answer Confidence level Comment
Ethan Ilzetzki's picture Ethan Ilzetzki London School of Economics Remain unchanged Not confident at all
Łukasz Rachel's picture Łukasz Rachel UCL Increase (to 4-6%) Not confident at all
It is extremely hard to be confident about these issues. The range of estimates I have seen, e.g. from Goldman Sachs and co, is very wide. And the impact through political process, GE effects of more uncertainty, etc, is very hard to predict.
Jagjit Chadha's picture Jagjit Chadha National Institute of Economic and Social Research Remain unchanged Not confident at all
it is another innovatation on the long road of economic progress. it will throw open opportunities and problems in equal measure. The ultimate outcome in terms of growth and its distribution will depend on which policies are adopted, how monopoly power is challenged and what new ideas are ultimately released. As we do not yet know, I cannot say what the impact will be with any degree of certainty.
David Cobham's picture David Cobham Heriot Watt University Increase (to 4-6%) Confident
Assuming no overwhelming adverse shocks!
Sir Charles Bean's picture Sir Charles Bean London School of Economics Increase (to 4-6%) Not confident
Roger Farmer's picture Roger Farmer University of Warwick Increase (to 4-6%) Confident
Matthias Doepke's picture Matthias Doepke London School of Economics Increase (to 4-6%) Not confident
Jorge Braga de Macedo's picture Jorge Braga de ... Nova School of Business and Economics, Lisbon Increase (to 4-6%) Confident
At the 2017 NBER conference on The Economics of Artificial Intelligence: An Agenda Ajay K. Agrawal, Joshua Gans, and Avi Goldfarb it was not yet clear that machine learning would become a general purpose technology but this seems to have happened and not just in developed countries. Assuming the 4% inflation going forward, a global growth above that rate presumes a lessening of geopolitical tensions which at the moment is not apparent. I still bet on the upside rather then no change or fall.
Evi Pappa's picture Evi Pappa European University institute Remain unchanged Not confident
Nicola Fuchs-Schündeln's picture Nicola Fuchs-Sc... Goethe University Frankfurt Increase (to 4-6%) Not confident
The impact of AI on politics and society at large could be a threat to growth.
Gino A. Gancia's picture Gino A. Gancia Queen Mary University of London Increase (to 4-6%) Confident
Michael Wickens's picture Michael Wickens Cardiff Business School & University of York Remain unchanged Not confident
My guess is that it will increase the rate of growth, but by less than 4%
Richard Portes's picture Richard Portes London Business School and CEPR Increase (to 4-6%) Not confident
Alessandra Bonfiglioli's picture Alessandra Bonf... Queen Mary University of London Increase (to 4-6%) Confident
Ricardo Reis's picture Ricardo Reis London School of Economics Increase (to 4-6%) Not confident
Forecasting future growth over a decade is very hard, so "not confident" is the most relevant part of this answer.
Agnès Bénassy-Quéré's picture Agnès Bénassy-Quéré University Paris 1 & Paris School of Economics Remain unchanged Not confident
Paul De Grauwe's picture Paul De Grauwe London School of Economics Remain unchanged Confident
Ugo Panizza's picture Ugo Panizza The Graduate Institute, Geneva (HEID) Increase (to 4-6%) Confident
I am confident because I think that AI will lead to an increase in productivity and this higher economic growth. However, I am not very confident because it is possible that AI could increase unemployment and inequality and this may have backlashes on productivity and growth.
Robert Kollmann's picture Robert Kollmann Université Libre de Bruxelles Increase (to 4-6%) Not confident
The trend growth rate of global GDP has been remarkably stable since the mid-1970s, despite major technological advances (ICT revolution) and structural changes (e.g., collapse of communism, trade liberalization). It seems unlikely that the long-term trend growth rate of world GDP will be greatly affected by AI. But in the short to medium term (i.e., over the next decade), global growth could increase slightly, say by 0.5%, due to AI.
Andrea Ferrero's picture Andrea Ferrero University of Oxford Remain unchanged Not confident at all
I expect AI to have a significant impact on the economy, but I'm not really sure how. I can imagine that some sectors will benefit more than others, and some may even suffer. The implications for economic growth overall are highly uncertain in my view.
Cédric Tille's picture Cédric Tille The Graduate Institute, Geneva Increase (to 4-6%) Confident
Natalie Chen's picture Natalie Chen University of Warwick Increase (to 4-6%) Confident
Philip Jung's picture Philip Jung University of Dortmund Remain unchanged Not confident at all
Wouter Den Haan's picture Wouter Den Haan London School of Economics Remain unchanged Not confident
I would not be surprised if there is a substantial level effect and a nontrivial growth effect. But substantially higher sustained growth would surprise me.
Costas Milas's picture Costas Milas University of Liverpool Remain unchanged Confident
I would say: increase between 1% and 2%
Maria Demertzis's picture Maria Demertzis Bruegel Increase (to 4-6%) Confident
I view the recent developments very favourably. I am not sure whether the impact will be as hight as 4-6% but I certainly think it will be positive
Linda Yueh's picture Linda Yueh London Business School Increase (to 4-6%) Not confident
Lucio Sarno's picture Lucio Sarno Cambridge University Increase (to 4-6%) Confident

Question 2

Participant Answer Confidence level Comment
Ethan Ilzetzki's picture Ethan Ilzetzki London School of Economics Increase Not confident
Łukasz Rachel's picture Łukasz Rachel UCL Remain unchanged Not confident
Again, difficult to be confident. I am basing my answer on my reading of historical experience, which is that the displacement effect of technology has put pressure on wage growth but has not led to sustained rise in unemployment in the past.
Volker Wieland's picture Volker Wieland Goethe University Frankfurt and IMFS Decrease Not confident
Generally, I would expect increasing scarcity of labour due to demographic effects leading to a reduction in unemployment. This will very likely be the dominating factor. Ceteris paribus I think AI may well decrease unemployment a bit more, even while decreasing hours.
Jagjit Chadha's picture Jagjit Chadha National Institute of Economic and Social Research Remain unchanged Confident
it may change the composition of employment but I see no reason why it will over the long run lead to pools of unemployment, unless we respond badly with the requirements for skills in the new-new economy - which I cannot rule out!
David Cobham's picture David Cobham Heriot Watt University Remain unchanged Not confident
It might take longer for the reinstatement effects to balance the other effects.
Sir Charles Bean's picture Sir Charles Bean London School of Economics Remain unchanged Confident
While I do not expect AI to have much effect on the overall level of unemployment, I do expect it to lead to substantial changes in the nature of jobs, with an increase in both job destruction and job creation. And there will be an important role for policy to assist those who find their jobs disappearing retrain and find new jobs.
Roger Farmer's picture Roger Farmer University of Warwick Remain unchanged Confident
Matthias Doepke's picture Matthias Doepke London School of Economics Remain unchanged Not confident
Jorge Braga de Macedo's picture Jorge Braga de ... Nova School of Business and Economics, Lisbon Increase Confident
The AI revolution may not cause job polarisation in high income countries as it will affect low-skilled, middle-skilled and high-skilled jobs. However unemployment is likely to increase in developing countries because geopolitical uncertainty involves countries like China, India, Brazil, Nigeria etc and that will have knock-on effects on high income countries.
Evi Pappa's picture Evi Pappa European University institute Remain unchanged Confident
AI might induce a change in working hours and habits, not necessarily a change in employed workers and possibly a change in the wage paid and productivity (See Erik Brynjolfsson, Danielle Li & Lindsey R. Raymond, NBER WP 31161).
Nicola Fuchs-Schündeln's picture Nicola Fuchs-Sc... Goethe University Frankfurt Increase Not confident
Again, the direct effect of AI might rather be positive, but the political uncertainty increases.
Gino A. Gancia's picture Gino A. Gancia Queen Mary University of London Remain unchanged Not confident
Michael Wickens's picture Michael Wickens Cardiff Business School & University of York Remain unchanged Confident
The number of jobs and the level unemployment will not change but the number of hours of work will fall and leisure increase. This is what has happened following past tech improvements. The same thing will happen with AI.
Richard Portes's picture Richard Portes London Business School and CEPR Remain unchanged Confident
Alessandra Bonfiglioli's picture Alessandra Bonf... Queen Mary University of London Decrease Not confident
Ricardo Reis's picture Ricardo Reis London School of Economics Remain unchanged Confident
Historically, the correlation between new technology adoption and unemployment, at the macro level, is close to zero once enough time has gone by. But, a decade is sufficiently short as a period of time, that it could go either way.
Agnès Bénassy-Quéré's picture Agnès Bénassy-Quéré University Paris 1 & Paris School of Economics Remain unchanged Not confident
Paul De Grauwe's picture Paul De Grauwe London School of Economics No answer Not confident at all
The option that the employment effect is uncertain is missing here
Ugo Panizza's picture Ugo Panizza The Graduate Institute, Geneva (HEID) Increase Not confident
This is very hard to predict, but I suspect that structural unemployment might increase because there will be a substantial number of workers with skills which are no longer useful or valuable
Robert Kollmann's picture Robert Kollmann Université Libre de Bruxelles Remain unchanged Not confident
Will AI have a major effect on the market frictions and rigidities that determine trend unemployment? Probably not.
Andrea Ferrero's picture Andrea Ferrero University of Oxford Remain unchanged Not confident at all
I expect unemployment to increase in the short run as human employment in some tasks and jobs becomes obsolete. In the medium run, the supply will adjust and it's possible that AI may even reduce the natural rate of unemployment in the long run. I'm just not sure.
Jürgen von Hagen's picture Jürgen von Hagen Universität Bonn Remain unchanged Very confident
Cédric Tille's picture Cédric Tille The Graduate Institute, Geneva Remain unchanged Confident
Unemployment effects may be limited, but the impact on income inequality and need for redistribution policy may be large.
Natalie Chen's picture Natalie Chen University of Warwick Increase Not confident
Philip Jung's picture Philip Jung University of Dortmund Remain unchanged Not confident at all
Wouter Den Haan's picture Wouter Den Haan London School of Economics Increase Not confident
My concern is that AI may be bad for the more vulnerable in the labour markets like the ones who will not be that easy to adapt to a new environment.
Costas Milas's picture Costas Milas University of Liverpool Increase Confident
Increase slightly.
Maria Demertzis's picture Maria Demertzis Bruegel Remain unchanged Confident
There will have to be reskilling. The quicker this happens the less the impact on unemployment.
Linda Yueh's picture Linda Yueh London Business School Remain unchanged Not confident
Lucio Sarno's picture Lucio Sarno Cambridge University Increase Not confident