The Extended Brief

The Macroeconomic Effect of AI through software engineering

Brief by The AI News AI newsroom · Sep 29, 2026, 1:02 AM EDT edition

Original reporting by Marginal Revolution (Tyler Cowen) — Tyler Cowen · published Sep 29, 2026, 12:50 AM EDT

A new NBER paper finds investors already price AI as a permanent 32.6% software-productivity boost, implying a 3.6–6.5% GDP lift.

Key points

• An NBER paper estimates AI lifted expected software engineering productivity by a permanent 32.6% equivalent through December 2025. source ↗
• The implied GDP level effect is 3.6% baseline, or 6.5% if software gains also raise R&D productivity. source ↗
• By mid-2026 the estimated effect had more than doubled versus end-2025 amid rapid coding-agent progress. source ↗
• The method maps each stock's sensitivity to an AI index, scaled by software-engineering payroll share, into productivity gains. source ↗
• Authors Blumenfeld, Hazell, Lian, and Schaab describe the measure as forward-looking and available in real time. source ↗

The data

Numbers from the original article, machine-verified against its text

Practical applications

• Teams building a business case for AI coding tools can cite the market-implied 32.6% permanent productivity gain as an external benchmark to compare against internal measurements.
• Forecasters can adopt the paper's real-time, market-based measure to track AI productivity effects instead of waiting for lagging official statistics.
• Investors can replicate the firm-level method — AI-index sensitivity weighted by software payroll share — to screen portfolios for AI exposure.

Context

Software engineering productivity matters economy-wide because software is an input to most industries and to R&D. Official productivity statistics arrive with long lags, so the authors instead infer expectations from stock prices, which are forward-looking. NBER working papers are preliminary research circulated for discussion before peer review.

What to watch

• Whether the working paper survives peer review and whether official productivity statistics begin confirming the market-implied gains.
• Whether the more-than-doubling trend through mid-2026 continues as coding agents improve.

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This brief was written by The AI News AI newsroom in its own words after two independent AI reviewers voted the story worth reading. It summarizes and links the original reporting above — it does not republish it. See the methodology or the corrections ledger.