AI news drives investment and inflation before productivity gains
A study by De Nederlandsche Bank shows that AI market news triggers immediate US capital spending and price pressures, while spilling over into higher euro area import costs and inflation expectations well before broader productivity gains materialize.
Capital spending surges as adoption lags
Author Maria Sole Pagliari uses daily equity valuations and a Bayesian VAR to isolate revisions in the expected value of artificial intelligence.
In the United States, core capital-goods orders expand rapidly, rising by 0.73 percent by month 11 and peaking at 1.18 percent around month 29. Aggregate real GDP responds modestly with a 0.22 percent peak at month 16, while capacity utilisation temporarily contracts to minus 0.34 percent.
Price pressures build progressively: producer prices rise first, peaking at 0.84 percent at month 34, followed by headline CPI at 0.68 percent and core PCE at 0.49 percent around month 42. Nonfarm employment expands by 0.44 percent as weekly hours decline.
Financial spillovers outpace European output
Cross-border transmission to the euro area operates at two speeds.
Financial markets reprice swiftly as European equities rise by up to 4.6 percent and the euro depreciates.
Natural gas prices surge 24 percent within ten months, pushing headline HICP up by 1.6 percent at month 18 and core inflation to 1.3 percent after 30 months.
Two-year inflation swap rates increase by 36 basis points and OIS rates climb, while domestic industrial production and hours worked improve only with a prolonged delay.
Costly adoption before the harvest
The findings dismantle the naive assumption that technological breakthroughs deliver immediate disinflationary supply shocks.
By frontloading massive capital expenditure and energy demand, AI fuels near-term price pressures while productivity dividends lag.
Central banks cannot treat market optimism as an economic windfall.