The macroeconomic effects of AI technology shocks

Using detailed data on the artificial intelligence (AI) content of U.S. patents from 1980 to 2019, we construct a novel monthly measure of AI intensity in innovation and identify AI related technology shocks. These shocks generate delayed increases in total factor productivity, output, employment, hours, and wages, alongside persistent declines in consumer prices, consistent with a positive supply shock. Although AI-intensive patents largely fall within the broader ICT and automation domains, they stand out as higher-quality innovations, attracting more citations and exhibiting greater technological and market value. AI shocks consistently have substantially larger aggregate effects than broader ICT or automation shocks, suggesting that AI has had a particularly high-impact role in the ICT revolution. Unlike general technology shocks, however, AI shocks reduce the labor share and increase wealth inequality, indicating that their gains are not distributed evenly across the economy. To connect these historical findings to the most recent wave of innovation, we develop a new time series of Generative-AI patents within the U.S. patent universe. A shock based exclusively on Gen-AI patents produces the same qualitative supply-side effects as broader AI shocks, linking the macroeconomic consequences of earlier AI innovation to those of the emerging Generative-AI era.