Hawks and Doves: Financial Market Perception of Western Support for Ukraine

41 Pages Posted: 31 Jan 2023

See all articles by Matthias Neuenkirch

Matthias Neuenkirch

University of Trier - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Maria Repko

Centre for Economic Strategy

Enzo Weber

University of Regensburg; Government of the Federal Republic of Germany - Institute for Employment Research (IAB); Osteuropa-Institut (OEI)

Date Written: January 30, 2023

Abstract

Since the Russian invasion of Ukraine on February 24, 2022, the West has been intensively discussing its support strategy. Hawkish positions of strengthening Ukraine via armaments, financial resources, and sanctions against Russia compete with dovish views of avoiding further escalation of the military and geopolitical conflict. News from the war became a dominating factor for international politics and the world economy. In this paper, we analyse how international financial markets perceived this news, especially on Western positions. We create a comprehensive data set of news related to the war and measure reactions of five key financial markets. The results show that stronger support for Ukraine had a negative impact in the first weeks of the war. Thus, financial markets seem to have perceived it as a risk of further escalation threatening global economic activity. However, we find the perceptions strongly changed when the Ukrainian position in the war improved. Since that time, a hawkish line was a positive signal for financial markets. The results also confirm that the war and escalation in general had harmful effects on international financial markets.

Keywords: Conflict, Event Study, Financial Markets, News, Russia, Sanctions, Ukraine

JEL Classification: G14, H56

Suggested Citation

Neuenkirch, Matthias and Repko, Maria and Weber, Enzo, Hawks and Doves: Financial Market Perception of Western Support for Ukraine (January 30, 2023). Available at SSRN: https://ssrn.com/abstract=4342451 or http://dx.doi.org/10.2139/ssrn.4342451

Matthias Neuenkirch (Contact Author)

University of Trier - Faculty of Economics ( email )

Universit├Ątsring 15
Trier, 54296
Germany
+49 - (0)651 - 201 - 2629 (Phone)

HOME PAGE: http://www.uni-trier.de/index.php?id=50130

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Maria Repko

Centre for Economic Strategy ( email )

Enzo Weber

University of Regensburg ( email )

93040 Regensburg
D-93040 Regensburg, 93053
Germany

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Osteuropa-Institut (OEI) ( email )

Landshuter Str. 4
Regensburg, 93047
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
11
Abstract Views
124
PlumX Metrics