Epoch After Hours The EU and the not-so-simple macroeconomics of AI - Luis Garicano
15 snips
Dec 18, 2025 
In this engaging discussion, Luis Garicano, a Professor of Economics at LSE and former EU parliamentarian, dives into the complex interplay between AI and macroeconomics. He critiques the EU AI Act for its potential to stifle innovation and discusses how AI may disrupt entry-level job training, risking the loss of essential skills. Garicano also contrasts AI's impact on senior versus junior roles and calls for a more balanced policy approach that supports growth and adaptation in a rapidly changing landscape.
AI Snips
Chapters
Transcript
Episode notes
Autonomy Triggers Discrete Productivity Jumps
- Autonomous AI causes discrete productivity jumps once it no longer needs human supervision.
- While assisted AI yields small gains, autonomy can suddenly replace humans and reshape professions.
Short-Run Shocks Raise Relative Prices
- Short-run AI shocks create large relative price and employment shifts, not standard inflation.
- Consumer surplus rises but GDP and employment can fall until labor and capital reallocate.
Seniority-Based Technological Change
- Junior roles are disappearing through reduced hiring rather than mass firing.
- Evidence shows senior employment holds while junior hiring drops in AI-exposed occupations.