GenAI, Growth, and the Multi-Sector Multipliers

Tero Kuusi

No 131, ETLA Working Papers from The Research Institute of the Finnish Economy

Abstract: Abstract This paper analyzes the macroeconomic impact of Generative Artificial Intelligence (GenAI) on the Finnish economy, integrating recent literature and empirical evidence into a quantitative multi-sector general equilibrium model. The results indicate that, over a ten-year horizon, GenAI adoption increases annual economic growth by less than 0.5 percentage points in the baseline scenarios, with the potential for larger impacts—exceeding 1 percentage point—under scenarios involving greater automation and shifts in labor and ICT factor shares. The model’s input-output structure reveals significant multiplier effects, as productivity gains in one sector propagate to others. The service sector emerges as a pivotal driver of adjustment, with its adaptability helping to offset slower growth in sectors less amenable to automation. The study acknowledges uncertainties regarding the broader impacts of artificial general intelligence, emphasizing the limitations of current forecasts, adaptation frictions, and the importance of anticipatory behavior in financial markets. Overall, the findings underscore the transformative potential of GenAI, contingent upon proactive policy measures to foster economic growth.

Keywords: Artificial Intelligence; Productivity; Technology adoption (search for similar items in EconPapers)
JEL-codes: C6 E1 O3 O4 O5 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2025-08-14
New Economics Papers: this item is included in nep-ain and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:rif:wpaper:131

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