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Is AI Trained on Public Money? Evidence from US Data Centers

Author

Listed:
  • Adam Feher

    (University of Lausanne)

  • Emilia Garcia-Appendini

    (Norges Bank; University of St. Gallen - School of Finance; Swiss Finance Institute)

  • Roxana Mihet

    (Swiss Finance Institute - HEC Lausanne)

Abstract

We leverage a comprehensive dataset on U.S. data center energy loads, utility electricity prices, and establishment-level revenues, employment, and carbon emissions from 2010 to 2023 to examine whether rising data center demand affects local retail energy prices or other spillovers. For identification, we employ an instrumental variables continuous difference-indifferences design, exploiting exogenous variation in data center location attractiveness. We find no detectable local spillover effects from data center energy growth. A regional model calibrated to these null results suggests that shocks larger than those observed through 2023 could still result in noticeable increases in household utility bills if not offset by regulation or external supply.

Suggested Citation

  • Adam Feher & Emilia Garcia-Appendini & Roxana Mihet, 2025. "Is AI Trained on Public Money? Evidence from US Data Centers," Swiss Finance Institute Research Paper Series 25-73, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp2573
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    Keywords

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    JEL classification:

    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O44 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Environment and Growth
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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