What Can News Shocks Tell Us About the Effects of AI?

Authors

Christoph Görtz, Christopher Gunn, Thomas A. Lubik

Posted to EERN: June 24, 2025

FEDERAL RESERVE RESEARCH: Richmond

The emergence of artificial intelligence (AI) can be seen as a shock containing information about the future path of total factor productivity (TFP), that is, a TFP news shock. Using a standard empirical model of the macroeconomy, we identify news shocks from observed data of TFP and show their effects on the main aggregates. News about AI has at first a negligible effect on TFP. The impact then gradually increases as the new technologically diffuses throughout the economy. The qualitative impact of AI news on the macroeconomic aggregates is more immediate due to a wealth effect.

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