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Artificial Intelligence (AI), financial market and economic growth: A simple theoretical model

Author

Listed:
  • Thiédjé Gaudens-Omer Kouakou

    (University Alassane Ouattara)

Abstract

In this paper, we develop a theoretical model analyzing the role of financial development in the AI-economic growth nexus. Our theoretical framework is inspired by that of Zeira (1998) and Aghion et al. (2017), each articulated with that of Pagano (1993. The results show that AI affects economic growth through two channels: direct effects on the final product market via the productivity of automated tasks, indirect effects via financial market imperfections. In case of strong financial development, AI positively affects economic growth. But in case of weak financial development, AI can reduce economic growth. Taking the financial market into account thus avoids underestimating or overestimating the effect of AI on economic growth. In addition to labor market and education system reforms, our study recommends financial reforms that can improve financial development and more effectively allocate investments to finance AI. More specifically, African countries must invest in AI, holistically, in order to increase their shares in the global AI market.

Suggested Citation

  • Thiédjé Gaudens-Omer Kouakou, 2025. "Artificial Intelligence (AI), financial market and economic growth: A simple theoretical model," Economics Bulletin, AccessEcon, vol. 45(3), pages 1297-1307.
    • Handle: RePEc:ebl:ecbull:eb-25-00004
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    References listed on IDEAS

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    1. Philippe Aghion & Céline Antonin & Simon Bunel, 2019. "Artificial Intelligence, Growth and Employment: The Role of Policy," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 510-511-5, pages 149-164.
    2. Daron Acemoglu & Pascual Restrepo, 2019. "Automation and New Tasks: How Technology Displaces and Reinstates Labor," Journal of Economic Perspectives, American Economic Association, vol. 33(2), pages 3-30, Spring.
    3. Annamaria Lusardi & Olivia S. Mitchell, 2014. "The Economic Importance of Financial Literacy: Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 52(1), pages 5-44, March.
    4. Hendershott, Terrence & Riordan, Ryan, 2013. "Algorithmic Trading and the Market for Liquidity," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 48(4), pages 1001-1024, August.
    5. Bart van Liebergen, 2017. "Machine learning: A revolution in risk management and compliance?," Journal of Financial Transformation, Capco Institute, vol. 45, pages 60-67.
    6. Daron Acemoglu & Pascual Restrepo, 2016. "The Race Between Machine and Man: Implications of Technology for Growth, Factor Shares and Employment," NBER Working Papers 22252, National Bureau of Economic Research, Inc.
    7. repec:hal:spmain:info:hdl:2441/7n49nkmngd8448a5ts5gt5ade0 is not listed on IDEAS
    8. repec:spo:wpmain:info:hdl:2441/7n49nkmngd8448a5ts5gt5ade0 is not listed on IDEAS
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    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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