​Douglas Laxton, Asya Kostanyan, Jared Laxton, Salome Mkervalidze, Sopio Mkervalidze

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Abstract

Artificial intelligence (AI) could substantially increase productivity and investment, but its effects on real interest rates depend on who receives the gains and what they do with them. When income and wealth become concentrated among households that value accumulating assets for its own sake, saving may remain strong even as wealth grows. This is an economic mechanism motivating the analysis, not a result established independently by the simulations. In an illustrative global macroeconomic experiment, AI-driven investment initially raises US real interest rates, but rates subsequently decline as capital accumulates and investment demand moderates. Output rises while financial wealth becomes more concentrated. Alternative assumptions about preferences for holding wealth yield different equilibrium interest rates and asset distributions. The exercise highlights how investment demand and the desire to accumulate wealth can jointly shape the macroeconomic consequences of AI.