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How important are global geopolitical risks to emerging countries?

Chak Hung Jack Cheng () and Ching-Wai (Jeremy) Chiu

International Economics, 2018, issue 156, 305-325

Abstract: This paper shows that shocks to global geopolitical risk carry considerable business cycle implications for emerging economies. We estimate structural VAR models for 38 emerging countries and find evidence that these shocks are associated with significant economic contractions. The average share of output variation explained by global geopolitical risk shocks is between 13 and 22 percent. However, the individual share for each country varies vastly across our sample. The results remain robust when controlling for the terms of trade, global financial conditions, the US economic policy uncertainty and the US stock market volatility.

Keywords: Global geopolitical risks; Emerging countries; Business cycles; Structural VAR (search for similar items in EconPapers)
JEL-codes: E32 F42 F44 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:cii:cepiie:2018-q4-156-21