00:00Demand for labor in certain occupations has declined, most notably for coders, a field where AI has made significant advances.
00:09Similarly, the unemployment rate for recent college grads has increased over the last few years at a time when some
00:16employers are deploying AI for what has been tasks previously performed by entry-level workers.
00:23Nevertheless, the overall unemployment rate is still low at 4.3%, and recent measures of layoffs remain subdued.
00:33Therefore, we do not yet know the exact evolution of this labor market transition nor its intensity.
00:41To be sure, the AI transition I am contemplating could have profound implications for monetary policy.
00:48It is too early to observe the exact contours, but I am carefully studying several aspects of this transition.
00:57Allow me to briefly raise two issues for consideration.
01:02First, if AI continues to raise productivity, economic growth could remain strong, even as churn in the labor market leads
01:10to an increase in unemployment.
01:13In a productivity boom such as this, a rise in unemployment may not indicate increased slack.
01:20As such, a normal demand-side monetary policy may not be able to ameliorate an AI-caused unemployment spell without
01:29also increasing inflationary pressure.
01:34This means that monetary policymakers would face trade-offs between unemployment and inflation.
01:41There is a role for monetary policy.
01:45However, education, workforce, and other policy that is non-monetary may be better suited to address these challenges in a
01:54more targeted way.
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