IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/128950.html

Artificial intelligence (AI) innovation and economic growth: asymmetric analysis and role of stock market, financial stability and trade openness

Author

Listed:
  • Ozili, Peterson K

Abstract

This study examines the asymmetric effect of artificial intelligence (AI) innovation on economic growth in 50 countries from 2000 to 2020 using the quantile regression method. The findings reveal that AI innovation stimulates economic growth at low and middle tail of the economic growth distribution. Interaction analyses reveal that the use of AI innovation in the stock market stimulates economic growth while the use of AI innovation to support financial stability and international trade activities diminish economic growth. Asymmetric interaction analyses reveal that: AI innovation stimulates economic growth when countries are experiencing low growth rates; the use of AI innovation in the stock market stimulates economic growth when countries are experiencing high growth rates and in mid-growth emerging market and developing countries; the use of AI innovation to support financial stability activities diminish economic growth when countries are experiencing low growth rates and the use of AI innovation to support international trade activities diminish economic growth when countries are experiencing high growth rates.

Suggested Citation

  • Ozili, Peterson K, 2026. "Artificial intelligence (AI) innovation and economic growth: asymmetric analysis and role of stock market, financial stability and trade openness," MPRA Paper 128950, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:128950
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/128950/1/MPRA_paper_128950.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Luciano Fanati & Piero Manfredi, 2003. "Population, Unemployment and Economic Growth Cycles: A Further Explanatory Perspective," Metroeconomica, Wiley Blackwell, vol. 54(2‐3), pages 179-207, May.
    2. Hu, Ruiyang & Yang, Yibai & Zheng, Zhijie, 2021. "Inflation, endogenous quality increment, and economic growth," Mathematical Social Sciences, Elsevier, vol. 114(C), pages 72-86.
    3. Loren Brandt & Gueorgui Kambourov & Kjetil Storesletten, 2026. "Barriers to Entry and Regional Economic Growth in China," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 93(1), pages 286-326.
    4. Rizwan Ali & Jin Xu & Mushahid Hussain Baig & Hafiz Saif Ur Rehman & Muhammad Waqas Aslam & Kaleem Ullah Qasim, 2024. "From data to decisions: enhancing financial forecasts with LSTM for AI token prices," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 51(8), pages 1677-1693, April.
    5. Yingying Lu & Yixiao Zhou, 2021. "A review on the economics of artificial intelligence," Journal of Economic Surveys, Wiley Blackwell, vol. 35(4), pages 1045-1072, September.
    6. Lu, Chia-Hui, 2021. "The impact of artificial intelligence on economic growth and welfare," Journal of Macroeconomics, Elsevier, vol. 69(C).
    7. Hu, Yingyao & Yao, Jiaxiong, 2022. "Illuminating economic growth," Journal of Econometrics, Elsevier, vol. 228(2), pages 359-378.
    8. Laeven, Luc & Levine, Ross, 2009. "Bank governance, regulation and risk taking," Journal of Financial Economics, Elsevier, vol. 93(2), pages 259-275, August.
    9. Julius Tan Gonzales, 2023. "Implications of AI innovation on economic growth: a panel data study," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 12(1), pages 1-37, December.
    10. Jérôme Creel & Paul Hubert & Fabien Labondance, 2015. "Financial stability and economic performance in Europe," Post-Print hal-03459729, HAL.
    11. Ernst Ekkehardt & Merola Rossana & Samaan Daniel, 2019. "Economics of Artificial Intelligence: Implications for the Future of Work," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-35, June.
    12. Czarnitzki, Dirk & Fernández, Gastón P. & Rammer, Christian, 2023. "Artificial intelligence and firm-level productivity," Journal of Economic Behavior & Organization, Elsevier, vol. 211(C), pages 188-205.
    13. Collin Chikwira & Jahed Iqbal Mohammed, 2023. "The Impact of the Stock Market on Liquidity and Economic Growth: Evidence of Volatile Market," Economies, MDPI, vol. 11(6), pages 1-19, May.
    14. Nam, Hyun-Jung & Ryu, Doojin, 2024. "Does trade openness promote economic growth in developing countries?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 93(C).
    15. Creel, Jérôme & Hubert, Paul & Labondance, Fabien, 2015. "Financial stability and economic performance," Economic Modelling, Elsevier, vol. 48(C), pages 25-40.
    16. repec:spo:wpmain:info:hdl:2441/5euk7d0f8t81prfu1k2sspdcok is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rishika Khetan & Varda Sardana & Shubham Singhania & Jagvinder Singh, 2025. "Financial stability through a global perspective: an in-depth integrative review," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 16(8), pages 2912-2929, August.
    2. Hakan Yilmazkuday, 2025. "Artificial intelligence and labor markets: evidence from google trends," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 49(4), pages 1078-1093, December.
    3. Carlo Drago & Alberto Costantiello & Marco Savorgnan & Angelo Leogrande, 2025. "Driving AI Adoption in the EU: A Quantitative Analysis of Macroeconomic Influences," Working Papers hal-05102974, HAL.
    4. Cristian Barra & Roberto Zotti, 2019. "Market power and stability of financial institutions: evidence from the Italian banking sector," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 28(2), pages 235-265, December.
    5. Uddin, Md Hamid & Mahi, Masnun Al & Akter, Shabiha & Mollah, Sabur & Liu, Jia, 2026. "Is donation funding a dilemma for microfinance institutions?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 106(C).
    6. Anas Alaoui Mdaghri & Abdessamad Raghibi, 2025. "On the nonlinear relationship between bank liquidity creation and financial stability: the moderating role of institutional quality in African economies," Journal of Business Economics, Springer, vol. 95(6), pages 871-915, August.
    7. Vít Pošta & Aziya Mukusheva & Nurilya Kuchukova, 2022. "Economic Performance and Financial Stability: Case of the Eurasian Economic Union," Journal of Economics / Ekonomicky casopis, Institute of Economic Research, Slovak Academy of Sciences, vol. 70(1), pages 22-35, January.
    8. Carlo Drago & Alberto Costantiello & Marco Savorgnan & Angelo Leogrande, 2025. "Macroeconomic and Labor Market Drivers of AI Adoption in Europe: A Machine Learning and Panel Data Approach," Economies, MDPI, vol. 13(8), pages 1-62, August.
    9. Maha Kalai & Hamdi Becha & Kamel Helali, 2024. "Effect of artificial intelligence on economic growth in European countries: a symmetric and asymmetric cointegration based on linear and non-linear ARDL approach," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 13(1), pages 1-37, December.
    10. Klein, Paul-Olivier & Turk-Ariss, Rima, 2022. "Bank capital and economic activity," Journal of Financial Stability, Elsevier, vol. 62(C).
    11. Kunpeng Wang & Jiahui Hu, 2026. "Governance of Technological Transition: A Predator-Prey Analysis of AI Capital in China's Economy and Its Policy Implications," Papers 2601.03547, arXiv.org.
    12. Lin Ren & Yingyue Sun & Deping Xiong & Yu Wei, 2025. "Evaluating the Impact of Private and Public Sentiments on the Linkage Between Gold and Stock Markets: Evidence from China," Evaluation Review, , vol. 49(4), pages 739-772, August.
    13. Ben Bouheni, Faten & Hasnaoui, Amir, 2017. "Cyclical behavior of the financial stability of eurozone commercial banks," Economic Modelling, Elsevier, vol. 67(C), pages 392-408.
    14. Bouchra Al MAWLA & George M. El KAZZI & Hiba S. OTHMAN, 2025. "Artificial intelligence as a disruptive force in economics: transformations, challenges, and future prospects," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(2(643), S), pages 87-106, Summer.
    15. Florencia Jaccoud, 2025. "Robots & AI exposure and wage inequality: a within occupation approach," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 15(4), pages 1035-1090, December.
    16. Ashraf, Junaid, 2022. "Do political instability, financial instability and environmental degradation undermine growth? Evidence from belt and road initiative countries," Journal of Policy Modeling, Elsevier, vol. 44(6), pages 1113-1127.
    17. Vaibhavi Aher, 2023. "Einführung und Überblick," Springer Books, in: Vaibhavi Aher (ed.), Statistische und mathematische Methoden in der Wirtschaft, chapter 1, pages 1-71, Springer.
    18. Ima Amaliah & Qaisar Ali & Tasya Aspiranti & Nunung Nurhayati & Abdul Razak Abdul Hadi & Asep Darmansyah, 2026. "Decoupling Commercial Banks Risk-Taking Through Circular Economy Financing and Economic Stability: The Case of a Developing G20 Economy," Circular Economy and Sustainability, Springer, vol. 6(2), pages 1-24, April.
    19. Ünveren, Burak & Durmaz, Tunç & Sunal, Seçkin, 2023. "AI revolution and coordination failure: Theory and evidence," Journal of Macroeconomics, Elsevier, vol. 78(C).
    20. Cristian BARRA & Roberto ZOTTI, 2018. "Financial Stability as a Public Policy Goal to Increase Local Economic Development: an Empirical Investigation from Italian Labour Market Areas," CELPE Discussion Papers 154, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:128950. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.