Geopolitical Risk Perceptions

53 Pages Posted: 17 Sep 2024

See all articles by Yevheniia Bondarenko

Yevheniia Bondarenko

Deutsche Bundesbank

Vivien Lewis

Research Centre

Matthias Rottner

Deutsche Bundesbank - Research Centre

Yves S. Schüler

Deutsche Bundesbank

Multiple version iconThere are 2 versions of this paper

Date Written: August 05, 2024

Abstract

Geopolitical risk cannot be measured in a universal way. We develop new geopolitical risk indicators relying on local newspaper coverage to account for different perceptions. Using Russia as a case study, we demonstrate that geopolitical risk shocks identified from local news sources have significant adverse effects on the Russian economy, whereas geopolitical risk shocks identified from English-language news sources do not. We control for restricted press freedom by analyzing state-controlled and independent media separately. Employing a novel Russian sanctions index, we illustrate that geopolitical risk shocks propagate beyond the sanctions channel. Still, sanctions worsen the inflationary impact of geopolitical risk shocks substantially.

Keywords: geopolitical risk, risk perceptions, Russia, sanctions, shock transmission

JEL Classification: E32, E44, E71, F44, F51, G41

Suggested Citation

Bondarenko, Yevheniia and Lewis, Vivien and Rottner, Matthias and Schüler, Yves S., Geopolitical Risk Perceptions (August 05, 2024). Deutsche Bundesbank Discussion Paper No. 37/2024, Available at SSRN: https://ssrn.com/abstract=4955431 or http://dx.doi.org/10.2139/ssrn.4955431

Yevheniia Bondarenko

Deutsche Bundesbank

Vivien Lewis

Research Centre ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Matthias Rottner

Deutsche Bundesbank - Research Centre ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

Yves S. Schüler (Contact Author)

Deutsche Bundesbank ( email )

Wilhelm-Epstein-Str. 14
Frankfurt/Main, 60431
Germany

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