The Artificial intelligence can be applied to analyze the inflation and move forward in monetary politics, financial oversight and economic analysis, as demonstrated by researchers from Chile, Peru and Uruguay, in the frame of a table on AI and central bank which was carried out during the XXXIX Annual Economics Conference.
During the meeting, in which they participated Laura Rodriguez Garcia and Patricia Marchesano, by UTEC University; Valentina Cortes, by Central Bank of Chile; Jamile Magaly Valles Espinoza from SBS – Peru; and Diego Fernandez, of the Central Bank of Uruguayalternative measurements of inflation.
In this framework, Fernández together with Rodrigo Moras, also a member of the team of the regulatory body of the Uruguay, presented a study entitled “analysis of Underlying inflation and expectations” which was carried out using 100 Artificial Intelligence methods.
The analysis includes data from October 2022 to May 2024 and also aimed to evaluate how the inflation expectations align with economic reality and understand inflationary dynamics excluding volatile components.
“On the one hand, the idea is to try to find an alternative measure of inflation; on the other, to compare this with analysts’ expectations in the month of the survey and project it out to six months,” the authors explained.
The study refers to “core inflation” which is considered key in eliminating temporary fluctuations in volatile prices offering a clearer view of the medium-term inflation trend.
“This allows for informed decisions to be made to maintain economic stability and proactively adjust monetary policies,” the authors note.
The potential of Artificial Intelligence in economic analysis
The conclusions of the study indicate that the potential of AI in economic analysis was demonstrated, training local models with official methodologies and data obtained through web scraping.
Furthermore, it is concluded that inflation expectations are largely aligned with economic reality, highlighting the accuracy of regenerative AI models in the prediction and analysis of economic data.
Finally, the study states that this type of tools considered “innovative” improve the efficiency in the implementation of economic measures, providing policy makers with a solid base for informed decision making.
Source: Ambito
