This paper examines whether local investments in artificial intelligence (AI) improve subnational borrowing terms in an international setting. Building on U.S. evidence that AI-intensive countries experience lower municipal bond yields and stronger local fiscal capacity, the analysis is extended to five OECD countries: Belgium, Canada, Germany, Spain and Sweden. Vacancy data from Lightcast are used to measure the AI share of job postings at comparable subnational geographies and to link these measures to municipal and regional bond outcomes. Expansions of the AI share of jobs are found to be associated with increases rather than decreases, in bond yields. These results point to challenges that many OECD economies may face in financing the development of new digital infrastructure in the emerging AI economy.
Artificial intelligence and local debt
Evidence from five OECD bond markets
