Macroeconomics Seminar Series. "The Rise of AI Pricing: Trends, Driving Forces, and Implications for Firm Performance" (Joint Work with Jonathan Adams, Min Fang, and Yajie Wang)
Published: 11 February 2025
06 March 2025. Dr Zheng Liu, Federal Reserve Bank of San Francisco
Dr Zheng Liu, Federal Reserve Bank of San Francisco
"The Rise of AI Pricing: Trends, Driving Forces, and Implications for Firm Performance" (Joint Work with Jonathan Adams, Min Fang, and Yajie Wang)
Thursday, 06 March 2025. 15:00-16:30
Room 355, Gilbert Scott Building
Abstract
We document key stylized facts about the time-series trends and cross-sectional distributions of AI pricing and study its implications for firm performance, both on average and conditional on monetary policy shocks. We use the universe of online job posting data from Lightcast to measure the adoption of AI pricing. We infer that a firm is adopting AI pricing if it posts a job opening that requires AI-related skills and contains the keyword “pricing.” At the aggregate level, the share of AI-pricing jobs in all pricing jobs has increased by more than tenfold since 2010. The increase in AI-pricing jobs has been broad-based, spreading to more industries than other types of AI jobs. At the firm level, larger and more productive firms are more likely to adopt AI pricing. Moreover, firms that adopted AI pricing experienced faster growth in sales, employment, assets, and markups, and their stock returns are also more sensitive to high-frequency monetary policy surprises than non-adopters. We show that these empirical observations can be rationalized by a simple model where a monopolist firm with incomplete information about the demand function invests in AI pricing to acquire information.
Bio
Zheng Liu is a Vice President of International Research and the Director of the Center for Pacific Basin Studies at the Federal Reserve Bank of San Francisco. He is also a policy fellow at the Stanford Institute for Economic Policy Research (SIEPR). His current research interests are macroeconomics, monetary economics, international finance, and the Chinese economy. Zheng completed his Ph.D. and M.A. in Economics at the University of Minnesota, and his B.A. and M.A. in Economics at the Renmin University of China. Zheng serves an Associate Editor of the Journal of Monetary Economics and the Journal of Economic Dynamics and Control.
For more information, please visit his website.
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First published: 11 February 2025