Macroeconomics in the age of AI

Researchers led by Professor C. at MIT’s Department of Economics examine whether high valuations of AI-related firms reflect a speculative bubble or genuine growth.

Using a speculative-growth framework, they show how AI’s capacity to substitute for labor can sustain capital accumulation and create the possibility of both low- and high-growth equilibria.

In the high-growth regime, elevated asset values reinforce optimistic expectations, supporting further investment and expansion.

The study offers a macroeconomic perspective on the AI boom, suggesting that rising valuations may represent more than an asset price surge — they may function as a driver of structural growth.