A study found that as artificial intelligence (AI) expands, it could stabilize prices in the short term and control inflation in the long term. It was also analyzed that AI could increase productivity, raising Korea's gross domestic product (GDP) by about 35%.
Leonardo Gambacorta, head of the Emerging Markets Department at the Bank for International Settlements (BIS), presented a paper titled "The effect of AI on output and inflation" during the fifth session on the second day of the 2025 BOK International Conference held at the Bank of Korea on the 3rd.
In this study, Gambacorta analyzed the impact of AI on macroeconomics, including output, consumption, and inflation. The study found that the spread of AI could increase GDP, consumption, and investment in the long term, whereas the path of inflation and policy interest rates depends on whether economic agents anticipate these changes.
If households and corporations do not anticipate productivity improvements from the spread of AI, disinflation (slowing inflation rate) occurs in the short term, transitioning to an inflationary phase as overall demand increases later. However, if productivity improvement is anticipated, inflationary pressures occur from the outset.
AI was also found to increase GDP by about 35% and consumption both in the short and long term through productivity improvement. In particular, in the short term, households anticipating future income increases showed a trend of sharply increasing consumption initially by smoothing consumption.
The analysis by industry revealed that productivity improvements due to AI led to an increase in real wages in the long term. As a result, labor-intensive industries saw smaller production increases compared to capital-intensive industries due to rising production costs.
Looking at different industry types, if AI is concentrated in the consumer goods industry, labor shifts to the capital goods industry, resulting in a chain reaction that significantly boosts overall economic productivity. However, if AI is concentrated solely in the capital goods industry, the responses in total production and inflation weaken.
Gambacorta noted, "The introduction of AI holds growth potential that could offset long-term demand contraction due to aging populations and supply chain restructuring," adding that "in the long term, it could have positive ripple effects on the overall macroeconomy by enhancing growth and investment."