Professor Isaiah Andrews is the Charles E. and Susan T. Harris Professor of Economics at the Massachusetts Institute of Technology. As one of the world's leading econometricians, he develops reliable and broadly applicable methods of statistical inference to address key challenges in economics, the social sciences, and medicine. He has received major recognitions including a MacArthur Fellowship (2020) and the John Bates Clark Medal (2021), awarded to outstanding American economists under the age of 40. He is also a Fellow of the Econometric Society and served as co-editor of the American Economic Review from 2021 to 2023.
Abstract
Economic theory predicts that transformative technologies may influence interest rates by changing growth expectations, increasing uncertainty about growth, or raising concerns about existential risk. Examining US bond yields around major AI model releases in 2023-4, we find economically large and statistically significant movements concentrated at longer maturities. The median and mean yield responses across releases in our sample are negative: long-term Treasury, TIPS, and corporate yields fall and remain lower for weeks. Viewed through the lens of a simple, representative agent consumption-based asset pricing model, these declines correspond to downward revisions in expected consumption growth and/or a reduction in the perceived probability of extreme outcomes such as existential risk or arrival of a post-scarcity economy. By contrast, changes in consumption growth uncertainty do not appear to drive our results.
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