The Macroeconomic Effects of AI Uncertainty

This paper examines the macroeconomic implications of uncertainty shocks related to artificial intelligence (AI). I construct a novel text-based AI Uncertainty (AIU) Index from newspaper coverage that displays sharp increases around notable AI developments. The index also demonstrates limited correlation with established measures of economic uncertainty. Using SVAR-IV with an instrument that orthogonalises first- and second-moment coverage of AI, I find that positive AI uncertainty shocks generate significant contractionary effects on equity prices, hours worked, and wages, with smaller and less persistent effects on employment and output. Industry-level estimates, in turn, highlight heterogeneous adjustments along both the labour quantity and price margins. These findings indicate that AI uncertainty is a distinct source of economic fluctuations, with a response pattern that differs from that of conventional uncertainty shocks.