The Economics of AI Inference: Inflation Dynamics, Welfare Costs, and Optimal Monetary Policy under the Inference-Cost Phillips Curve
The episode discusses a paper titled "The Economics of AI Inference: Inflation Dynamics, Welfare Costs, and Optimal Monetary Policy under the Inference-Cost Phillips Curve." The hosts explain how AI inference costs are becoming a major economic input, affecting inflation. They detail the model's findings and propose policy solutions for central banks to track these costs and adjust monetary policy accordingly.