The Macroeconomic Effect of AI through software engineering
We measure how artificial intelligence (AI) affects the economy through its impact on software engineering productivity. We use information from financial markets to develop a forward-looking measure that is available in real time. We estimate the sensitivity of each firm’s stock return to an AI stock market index, and how this sensitivity depends on the […] The post The Macroeconomic Effect of…
A new research paper by economists Alex Blumenfeld, Jonathon Hazell, Chen Lian, and Andreas Schaab explores the macroeconomic impact of artificial intelligence (AI) on software engineering productivity. The study utilizes data from financial markets to create a forward-looking measure of AI's effect, which is updated in real-time.
The researchers estimate the relationship between a firm's stock return and its stock in AI stocks, as well as how this relationship changes based on the proportion of a firm's payroll dedicated to software engineering.
From November 2022 to December 2025, AI led to a 32.6% increase in the market's expected present value of software engineering productivity, resulting in a 3.6% boost in GDP. However, if AI also enhances R&D productivity, the impact on GDP could reach 6.5%. By mid-2026, as coding agents advance rapidly, the AI productivity effect had more than doubled compared to the end of 2025.
The authors argue that this methodology demonstrates that markets do indeed incorporate the effects of AI into stock prices. The study is published in a new NBER working paper.
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