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Generative AI: What Type of Technology?

Author

Listed:
  • Martin Neil Baily
  • David M. Byrne
  • Aidan T. Kane
  • Paul E. Soto

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.

Suggested Citation

  • Martin Neil Baily & David M. Byrne & Aidan T. Kane & Paul E. Soto, 2026. "Generative AI: What Type of Technology?," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 26-30, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:26-30
    DOI: 10.1257/pandp.20261034
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    More about this item

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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