HOW ARTIFICIAL INTELLIGENCE IS RESHAPING ECONOMICS AND FINANCE: A NEW ERA OF DECISION-MAKING
Keywords:
Artificial Intelligence (AI), Risk Management, Model Risk, Fraud Detection, Adversarial Attacks, Human-in-the-Loop, Regulation, Explainability, Bias, Automation, Machine Learning (ML), Predictive Analytics, Ethical AI, Data-Driven Decisions, Financial Stability.Abstract
Artificial Intelligence (AI) is revolutionizing economics and finance through data-driven decision-making. This article explores AI's transformative impact on both macroeconomic policy and financial services. In macroeconomics, machine learning enhances forecasting and real-time nowcasting, supporting better-informed decisions by central banks and policymakers. In finance, AI optimizes operations across banking, trading, credit scoring, and fraud detection—empowering tools like robo-advisors and autonomous trading systems. Real-world implementations by hedge funds, banks, and central banks illustrate AI’s growing influence. However, these advances come with challenges, including concerns about algorithmic transparency, bias, and systemic risks. The article concludes that AI’s full potential depends on ethical integration, regulatory oversight, and continued collaboration between human expertise and intelligent systems. This marks a new era of hybrid decision-making at the core of economic and financial strategy.
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