An NBER working paper finds the same automation technology path delivers 11.7% annual growth when households choose their saving rate optimally but only 2.2% when the saving rate is fixed at the calibrated US 2025 level of 23%, arguing that capital supply governs the size of the growth boom from automation In the model
Jesús Fernández-Villaverde, in NBER Working Paper 35964, measured the annual growth rate of an economy under two different saving rate scenarios. The paper found that the same technology path generates 11.7% annual growth when households choose their saving rate optimally, but only 2.2% when the saving rate is fixed at the calibrated U.S. 2025 level of 23%.
Verified 2026-11-02
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The payoff from automation may depend less on the technology than on how much capital the economy is willing to put into machines.
More on Capital
- While Amazon, Microsoft, Meta, Alphabet and Oracle have all sharply increased AI capital spending, Apple's cash paid for property, plant and equipment in the nine months to 27 June 2026 actually fell, to Apple's nine-month capex of $6.8 billion, down 28% from $9.47 billion a year earlier
- A Brookings Papers draft by Columbia's Stijn Van Nieuwerburgh projects that the US AI build-out of 2025 to 2032 will absorb, every year, 3.63% of GDP, versus 2.24% for the railroads of 1870–1890
- Global private investment in AI reached $344.7 billion in 2025, up 127.5% year-over-year, with generative AI companies alone capturing $170.9 billion of that total
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