This paper examines the impact of fiscal incentives on industrial investment in Uruguay from 1974 to 2010. Using a mixed-method approach that combines econometric models with machine learning techniques, the study investigates both the short-term and long-term effects of fiscal benefits on industrial investment. The results confirm the significant role of fiscal incentives in driving long-term industrial growth, while also highlighting the importance of a stable macroeconomic environment, public investment, and access to credit. Machine learning models provide additional insights into nonlinear interactions between fiscal benefits and other macroeconomic factors, such as exchange rates, emphasizing the need for tailored fiscal policies. The findings have important policy implications, suggesting that fiscal incentives, when combined with broader economic reforms, can effectively promote industrial development in emerging economies.

We propose using deep reinforcement learning to solve dynamic stochastic general equilibrium models. Agents are represented by deep artificial neural networks and learn to solve their dynamic optimisation problem by interacting with the model environment, of which they have no a priori knowledge. Deep reinforcement learning offers a flexible yet principled way to model bounded rationality within this general class of models. We apply our proposed approach to a classical model from the adaptive learning literature in macroeconomics which looks at the interaction of monetary and fiscal policy. We find that, contrary to adaptive learning, the artificially intelligent household can solve the model in all policy regimes.

Japan's graying society will require more investment in technologies such as artificial intelligence and robots to make up for a decline in the labor force and its effect on economic growth, according to a government report released Friday. The world's third-largest economy is on a firm footing, the white paper said, having enjoyed a moderate recovery for the past five and a half years under Prime Minister Shinzo Abe's policies, including aggressive monetary easing by the Bank of Japan. "Corporate profits are at record highs, labor and income conditions are improving, and increased income is leading to an expansion in consumption and investment, showing that a'virtuous economic cycle' is beginning to take hold," said the annual white paper on economy and fiscal policy. But the report warned that the country is also experiencing its worst labor shortage in a quarter century, and some industries such as transportation services and construction may already be seeing earnings suffer as a result. "Amid an aging population, (Japan) needs to drastically strengthen the supply side of the economy in order to deal with the labor shortage and realize sustainable growth," it said.

Japan's aging population will require more investment in technology such as artificial intelligence and robots to make up for a decline in the labor force for economic growth, according to a government report released Friday. The world's third-largest economy is on firm footing, having enjoyed a moderate recovery for the past five and a half years under Prime Minister Shinzo Abe's policies including aggressive monetary easing by the Bank of Japan. "Corporate profits are at record highs, labor and income conditions are improving, and increased income is leading to an expansion in consumption and investment, showing that a'virtuous economic cycle' is beginning to take hold," said the annual white paper on the economy and fiscal policy. But the report warned that the country is also experiencing the worst labor shortage in a quarter century, and some industries such as transportation services and construction may already be seeing earnings suffer as a result. "Amid an aging population, (Japan) needs to drastically strengthen the supply side of the economy in order to deal with the labor shortage and realize sustainable growth," it said.

In the decade since the Great Recession, governments have used fiscal policy to prop up flagging domestic demand. This response has been considered appropriate because the shock was seen as temporary. But this attention to demand-side weaknesses may have distracted governments from attending to supply-side gaps that have been widening with the acceleration of technological change and artificial intelligence. Policymakers should start paying more attention to what's called structural fiscal policies, that is, changes in both public spending and tax collection to aid the expansion of the productive potential of economies. As laborsaving technologies flood the market, delays in doing this could mean that workers pay a stiff price, while consumers do not realize many of the benefits.