Economic Consequences of Global Tensions

Ronald Smith

A chapter in Fault Lines After COVID-19, 2023, pp 135-147 from Springer

Abstract: Abstract There are various sources of global tensions and this chapter will focus primarily on geopolitical shocks, such as Russia’s invasion of Ukraine and China’s military exercises around Taiwan, rather than natural disasters and climate change. These have fed long-standing rivalries and security concerns and the responses have impacted finance, trade, military expenditures and other economic variables. The system responds to different types of shock differently and the responses are unlikely to be constant over time. I discuss the shocks and their predictability. Big geopolitical shocks tend to come from a low-frequency fat-tailed distribution, like earthquakes. Then I discuss the transmission mechanism, how the economic and security systems interact and how that interaction is managed.

Date: 2023
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DOI: 10.1007/978-3-031-26482-5_8

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