Prof Emanuele Bracco

AI innovation is shifting income from labour to capital in Europe. Regions with higher AI patent activity show declines in labour’s share, mainly through wage compression for medium- and high-skilled workers. This trend raises risks of greater inequality and highlights the need for policies that spread AI’s benefits more broadly.

U.S. dollar dominance persists despite geopolitical tensions and trade fragmentation because it functions as a coordination equilibrium. Network effects and strategic complementarities make switching currencies costly for users, reinforcing durability once dominance is established. This explains the dollar’s continued central role in global transactions, even without U.S. involvement, and the limited impact of protectionism, trade wars, or rising financial competition on its global position.

Economic sanctions reduce output but are rarely decisive. Their effects are modest, uneven, and slow, hitting poorer, less diversified economies hardest. Financial sanctions are more disruptive but costly for sanctioning countries and encourage long-run adaptation. Sanctions signal resolve and constrain options, but they rarely deliver rapid political change.