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Geopolitical shocks and commodity market dynamics: New evidence from the Russia-Ukraine conflict

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  • Aizenman, Joshua
  • Lindahl, Robert
  • Stenvall, David
  • Uddin, Gazi Salah

Abstract

We investigate the event-based geopolitical shocks from the Russian invasion of Ukraine on agricultural and energy commodities using daily event-based structural vector autoregression (SVAR). We find that the geopolitical shock affects the markets of wheat (2%), corn (1%), and European natural gas (7.5%). However, substantial heterogeneity is observed among the agricultural and energy markets. Geopolitical risk stemming from the Russia-Ukraine conflict affects the European natural gas market more strongly than the US and Asian markets. The regional segment of natural gas markets could explain this. Finally, our analysis explores how geopolitical news affects the dynamics of stock, currency, and bond markets.

Suggested Citation

  • Aizenman, Joshua & Lindahl, Robert & Stenvall, David & Uddin, Gazi Salah, 2024. "Geopolitical shocks and commodity market dynamics: New evidence from the Russia-Ukraine conflict," European Journal of Political Economy, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:poleco:v:85:y:2024:i:c:s0176268024000764
    DOI: 10.1016/j.ejpoleco.2024.102574
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    Cited by:

    1. Wang, Anqi & Ding, Shusheng & Cui, Tianxiang, 2025. "Green bond market stability and Russia Ukraine conflict: The role of green inclusive finance," Research in International Business and Finance, Elsevier, vol. 74(C).

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    More about this item

    Keywords

    Geopolitical shocks; Commodity markets; Structural vector autoregression;
    All these keywords.

    JEL classification:

    • F30 - International Economics - - International Finance - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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