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The impact of artificial intelligence on output and inflation

Author

Listed:
  • Aldasoro, Inaki
  • Doerr, Sebastian
  • Gambacorta, Leonardo
  • Rees, Daniel

Abstract

We construct an index of industry exposure to artificial intelligence (AI) to calibrate a macroeconomic multi-sector model. At the aggregate level, AI significantly raises output, consumption and investment in the short and long run. The inflation response depends on AI’s anticipated impact on productivity: When not anticipated, AI is initially disinflationary; when fully anticipated, inflation rises immediately. At the sectoral level, a sector’s initial AI exposure has little correlation with its long-term output increase. However, output grows by twice as much for the same increase in aggregate productivity when AI affects consumption rather than investment goods sectors, through sectoral linkages.

Suggested Citation

  • Aldasoro, Inaki & Doerr, Sebastian & Gambacorta, Leonardo & Rees, Daniel, 2024. "The impact of artificial intelligence on output and inflation," CEPR Discussion Papers 19604, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:19604
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    2. Aldasoro, I. & Gambacorta, L. & Korinek, A. & Shreeti, V. & Stein, M., 2025. "Intelligent financial system: How AI is transforming finance," Journal of Financial Stability, Elsevier, vol. 81(C).
    3. Leonardo Gambacorta & Enisse Kharroubi & Aaron Mehrotra & Tommaso Oliviero, 2025. "Artificial intelligence and growth in advanced and emerging economies: short-run impact," BIS Working Papers 1321, Bank for International Settlements.
    4. Yusuke Aoki & Joon Suk Park & Yuya Takada & Koji Takahashi, 2025. "Expecting job replacement by GenAI: effects on workers' economic outlook and behavior," BIS Working Papers 1269, Bank for International Settlements.
    5. Aldasoro, Iñaki & Armantier, Olivier & Doerr, Sebastian & Gambacorta, Leonardo & Oliviero, Tommaso, 2024. "The gen AI gender gap," Economics Letters, Elsevier, vol. 241(C).
    6. Aldasoro, Iñaki & Gambacorta, Leonardo & Pal, Rozalia & Revoltella, Debora & Weiss, Christoph & Wolski, Marcin, 2026. "AI adoption, productivity and employment: Evidence from European firms," EIB Working Papers 2026/02, European Investment Bank (EIB).
    7. Nickel, Christiane & Kilponen, Juha & Moral-Benito, Enrique & Koester, Gerrit & Ciccarelli, Matteo & Enders, Almira & Holton, Sarah & Landau, Bettina & Venditti, Fabrizio & Bobeica, Elena & Brand, Cla, 2025. "A strategic view on the economic and inflation environment in the euro area," Occasional Paper Series 371, European Central Bank.

    More about this item

    Keywords

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    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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