Spillovers Between Russia’s and Turkey’s Geopolitical Risk During the 2000–2021 Putin Administration

Emmanouil-Marios-Lazaros Economou () and Kyriazis Nikolaos A. ()
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Kyriazis Nikolaos A.: Department of Economics, University of Thessaly, 28th October 78 Str., 38333 Volos, Thessaly, Greece

Peace Economics, Peace Science, and Public Policy, 2022, vol. 28, issue 1, 29-50

Abstract: This paper sets out to explore the nexus between Russia and Turkey regarding their geopolitical uncertainty measures (GPR) during the Putin Administration era in Russia. The innovative Caldara and Iacoviello indices and the Vector Autoregressive (VAR) methodology are adopted. This study sheds light on the series of geopolitical events that have taken place in Russia and Turkey in recent decades. Empirical outcomes reveal that Turkish geopolitical uncertainty is a weak influencer that increases Russian GPR in the short-term while decreasing it in the medium-term. The reverse effect does not hold. The nexus between geopolitical risk in Turkey and Russia is found to be unstable. Uncertainty in Turkey constitutes both a negative and a positive determinant of geopolitical stability in Russia, depending on the time horizon of the impact. Russia could take advantage of Turkish positive effects in the medium-run. This could be alarming for investors but could also prove beneficial as they should not invest in Russian assets when the country’s geopolitical risk is elevated due to Turkey’s geopolitical instability. Additionally, it is documented that energy financial markets in Russia are not influential on geopolitical uncertainty.

Keywords: financial markets; geopolitical uncertainty; President Putin; Russia; Turkey (search for similar items in EconPapers)
JEL-codes: E52 G32 H56 N40 (search for similar items in EconPapers)
Date: 2022
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DOI: 10.1515/peps-2021-0021

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