This research aims to explore how the presence of and progress in automation technology can radically alter the macroeconomic environment of developed countries and, in particular, how public policy can best react to this. Rapid technical progress in the fields of artificial intelligence, robotics and computing often evokes the fear of impoverishment and widespread job losses, but it might also provide powerful tools to tackle 21st-century challenges such as secular stagnation. The question of how policymakers can use these technologies to reshape the production process and improve welfare is of high societal relevance and my approach to answering this question builds on influential recent academic contributions. More precisely, my main approach will consist of constructing, calibrating and simulating computable overlapping generations models which can be used to evaluate policy alternatives. I model automation as a realistic, multi-layered concept with proven empirical relevance and allow for different sources of heterogeneity in individuals such that the effects on welfare inequality can be monitored. In this general equilibrium setting, I will examine the scope for public policy to improve upon a laissez faire scenario of automation in relation to two long term challenges: ageing-driven secular stagnation and society-wide working-time reduction.