On 8 June, a session of the ISEG Research Seminars will take place from 13.00 to 14.00. The guest speaker will be Art Durnev from Robins School of Richmond. The seminar will take place in the Novo Banco lecture theatre (Quelhas Building, 4th floor).
The ISEG Research Seminars are held every week on Wednesdays, with the participation of professors from ISEG, as well as from other Portuguese and international educational institutions.
Title
When AI Meets Nuclear Power: Energy Choice, AI Adoption and Financial Fragility
Abstract
I develop a macro-finance model of Artificial Intelligence (AI) adoption and energy choice by companies. While nuclear energy provides more stable power sources, the resulting widespread AI deployment can endogenously reintroduce instability by magnifying firms’ exposure to shocks. This is because AI adoption raises productivity but replaces labor, increasing capital intensity and reducing labor stabilizing role. The model produces a nonlinear relationship between nuclear reliance, firm volatility, valuation, investment, and cross-sectional differences driven by firms’ AI sensitivity. Empirical work in progress combines firm-level AI measures, state nuclear variation, and international patent data. I find preliminary support for the model's central mechanisms. The results highlight the need for policy frameworks that simultaneously encourage AI productivity gains, while managing heightened systemic risk and incentivizing low-volatility energy infrastructures.
