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


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