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Can geopolitical risks excite Germany economic policy uncertainty: Rethinking in the context of the Russia-Ukraine conflict

Lihua Shen and Yanran Hong

Finance Research Letters, 2023, vol. 51, issue C

Abstract: The escalating conflict between Russia and Ukraine has increased geopolitical risks and global economic policy uncertainty, leading to an increasingly tense international situation. This paper takes Germany as an example to investigate whether the time-varying risks can transmit from geopolitical risks to economic policy uncertainty. By employing the time-varying Granger-causality tests, we find that (i) the risk transmitting from geopolitical risks and economic policy uncertainty can be affected by the occurrence of the Russia-Ukraine conflict; and (ii) this unidirectional relation owns an asymmetric characteristic, showing that increased geopolitical risks may excite Germany's economic policy uncertainty.

Keywords: Geopolitical risks; Germany economic policy uncertainty; Time-varying Granger causality; Russia-Ukraine conflict (search for similar items in EconPapers)
JEL-codes: C12 C15 C32 Q43 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (24)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:51:y:2023:i:c:s1544612322005979

DOI: 10.1016/j.frl.2022.103420

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