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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.  In the central experiment, the US real interest rate rises from 3.0% to 4.2% in 2032 before approaching 2.9% in the long run. By 2055, GDP is 17.8% above its no-AI path, labor's income share falls to 57.2%, and the wealthy group holds 89.9% of financial claims. The technical appendix sets out preferences, optimality conditions, production, financing, policy closure and technology learning.