The rise of AI has led to hopes of a new industrial revolution and, at the same time, fears of another bubble. This ambivalence extends to stock market valuations: they rest on expectations of vast revenue growth, but at the same time, there are doubts about their sustainability, either because the expectations themselves may disappoint or due to the eye-watering spending and investment plans being drawn up by firms in the sector.
Generative artificial intelligence (AI) has traits of a general-purpose technology: applications in many sectors, rapid improvement of the technology itself and a catalyst for complementary innovations. This has already happened with technologies such as electricity and the internet. Even so, having high potential does not necessarily mean an immediate or uniform macro impact. The final magnitude of AI's impact will depend on the speed of its adoption and the ability of firms to reorganise processes. This article examines how AI could affect productivity growth and what it means for the labour market.
