Generative AI: A new general-purpose technology for growth and research

Building on the review of the explosive achievements of Generative AI in its breakout year 2023 in our previous paper [52], this paper focuses on continued AI developments in 2024, its impact on growth, economic research, and the design and conduct of macroeconomic policy. GenAI has matured to become a true general-purpose technology of the new industrial revolution. The promise of Generative AI has moved from the 2023 hype phase of experimental applications to practical implementation and tangible results based on improved model capabilities, personalized content, energy efficiency, and autonomous agents focused on results. Improved model capabilities, driven by the further development of large LLM-based models and multimodal applications done by specialized AI companies, are now accompanied by the proliferation of small language models customized to company-specific processes and product needs. The year 2024 brought a significant development of "generative agents," which autonomously perform complex tasks and deliver desired results in legal and financial market services. As a transformative technology, AI has a significant impact on economic growth, research, and policymaking. It enhances productivity through automation, improves decision-making, and faster innovation. It can simulate economic scenarios, predict macroeconomic variables, and generate new hypotheses for research and policy design. Key areas for future research include labor markets, capital allocation and inequality. The fast progress of GenAI poses challenges (job displacement, algorithmic bias, and ethical concerns) and necessitates balanced policy interventions. Ethical dimensions, particularly bias and accountability in algorithmic decision-making, are critical for ensuring that AI benefits society. Policy recommendations include ensuring the equitable distribution of AI benefits, providing equal access to AI technologies, reducing the digital divide, investing in digital infrastructure, AI literacy and reskilling, and establishing robust ethical frameworks. Policies to promote inclusive growth, adapt to changing labor markets, and ensure transparent and accountable AI deployment would allow governments to harness GenAI potential while safeguarding societal well-being.