Discussion paper

DP18123 Geopolitical Risk Perceptions

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 local geopolitical risk shocks 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

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Citation

Bondarenko, Y, V Lewis, M Rottner and Y Schüler (eds) (2023), “DP18123 Geopolitical Risk Perceptions”, CEPR Press Discussion Paper No. 18123. https://cepr.org/publications/dp18123