Thank you for your comment. I think this is a reasonable criticism! There is definitely an endogenous link between investment and AI timelines that this model misses. I think that this might be hard to model in a realistic way, but I encourage people to try!
On the other hand, I think the strategic motivation is important as well. For example, here is Satya Nadella on the Dwarkesh Podcast:
And by the way, one of the things is that there will be overbuild. To your point about what happened in the dotcom era, the memo has gone out that, hey, you know, you need more energy, and you need more compute. Thank God for it. So, everybody’s going to race.
In reality, both mechanisms are probably in play. My paper is intended to focus on the race mechanism.
Two more notes: higher savings imply lower consumption in the short term. However, even if TAI isn’t invented, consumption will rise higher than in the stationary equilibrium purely from capital accumulation.
Lastly, the main thrust of the paper is on the implications for interest rates, I do not intend to make strong claims about social welfare.
Hi Matthew,
Thank you for your comment. I think this is a reasonable criticism! There is definitely an endogenous link between investment and AI timelines that this model misses. I think that this might be hard to model in a realistic way, but I encourage people to try!
On the other hand, I think the strategic motivation is important as well. For example, here is Satya Nadella on the Dwarkesh Podcast:
In reality, both mechanisms are probably in play. My paper is intended to focus on the race mechanism.
Two more notes: higher savings imply lower consumption in the short term. However, even if TAI isn’t invented, consumption will rise higher than in the stationary equilibrium purely from capital accumulation.
Lastly, the main thrust of the paper is on the implications for interest rates, I do not intend to make strong claims about social welfare.