Artificial Intelligence in Economics and Finance Theories by Tankiso Moloi & Tshilidzi Marwala

Author:Tankiso Moloi & Tshilidzi Marwala
Language: eng
Format: epub
ISBN: 9783030429621
Publisher: Springer International Publishing

6.5 Artificial Intelligence and the Phillips Curve

When the Phillips Curve made an appearance into the scene, labour had a considerable role in the production of goods and services. With the countries intensely pursuing technology, we begin to see most factories adopting AI-powered technologies in their production lines. Mostly, we began to see a massive line of production processes being automated.

When a huge part of the production line becomes automated (mechanized), we think the critical aspect of the Philips Curve will be impacted. Both inflation and unemployment variables are key to the Phillips Curve. In the era of artificial intelligence, where a huge part of the production line is expected to be automated (mechanized), we think the key aspect of the Philips Curve will be impacted. Marwala (2007, 2009) have defined artificial intelligence as a technique that is used to make computers intelligent.

In the era where factories are becoming smaller in terms of labour, it is given that the total/partial labour could be out of work because of automation. The expectation is that those that would have been eliminated by the system would be unable to save, pay taxes, or demand goods that will massively be produced by the automated manufacturing factories.

In this automated world, economic growth could be fuelled by robotic infrastructure. Because the robotic infrastructure would have possibly replaced workers, growth would not be accompanied by employment opportunities. At the same time, since this could result in unemployment, the demand for goods and services could be expected to be under pressure. If supply remains the same because the robotic infrastructure will be producing potentially at a higher rate than humans, prices could be expected to decline, dampening inflation prospects.

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