Generative AI: What Type of Technology?

Martin Neil Baily, David M. Byrne, Aidan T. Kane and Paul E. Soto

AEA Papers and Proceedings, 2026, vol. 116, 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.

JEL-codes: C45 D24 L23 L25 M15 O31 O33 (search for similar items in EconPapers)
Date: 2026
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DOI: 10.1257/pandp.20261034

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