Economists clash on AI productivity: why labor productivity beats noisy TFP right now
danielrock · x · 2026-10-19
Noah Smith argues TFP numbers are assumption-dependent and hard to measure, while labor productivity is simple — and the AI boom is the biggest sustained productivity burst in over 20 years. Economist Daniel Rock counters with a technical point: when investment growth is high, labor productivity should lead TFP, since new capital vintages take time to become productive but immediately drag down the Solow Residual. Ugly TFP readings don't necessarily refute AI's productivity effect.
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