AEA Papers and Proceedings
ISSN 2574-0768 (Print) | ISSN 2574-0776 (Online)
Generative AI: What Type of Technology?
AEA Papers and Proceedings
(pp. 26–30)
Abstract
The economic effects of generative AI (genAI) will depend on the type of technology it ultimately represents. The impact on productivity growth of discrete innovations, such as the lightbulb, fades when the market saturates. General-purpose technologies (GPTs), such as the electric dynamo, affect growth over longer horizons through knock-on innovations that enable additional applications. Inventions in the method of invention (IMIs) fuel growth through new ideas that translate into productivity gains. Emerging evidence indicates that genAI is both a GPT and an IMI and, thus, can be expected to have a sustained positive impact on productivity.Citation
Baily, Martin Neil, David M. Byrne, Aidan T. Kane, and Paul E. Soto. 2026. "Generative AI: What Type of Technology?" AEA Papers and Proceedings 116: 26–30. DOI: 10.1257/pandp.20261034Additional Materials
JEL Classification
- C45 Neural Networks and Related Topics
- D24 Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- L23 Organization of Production
- L25 Firm Performance: Size, Diversification, and Scope
- M15 IT Management
- O31 Innovation and Invention: Processes and Incentives
- O33 Technological Change: Choices and Consequences; Diffusion Processes