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Impact of US Economic Policy Uncertainty on Geopolitical Risk. Evidence from BRIC Economies

Author

Listed:
  • Arif, Imtiaz
  • Rawat, Amna Sohail
  • Shahbaz, Muhammad

Abstract

This paper estimates the relationship between US economic policy uncertainty and geopolitical risk in the BRIC economies.1 Due to the assumption of a non-linear and asymmetric relation between US economic policy uncertainty and geopolitical risk of BRIC countries, a nonparametric estimation technique, Quantile on Quantile approach has been used for empirical analysis. The empirical results revealed that the relationship between the US economic policy uncertainty and geopolitical risk of BRIC economies is heterogeneous in nature. We noted that economic policy uncertainty in the US is negatively related to geopolitical risk in Chinese and Russian economies. However, for Indian and Brazilian economies US economic policy uncertainty is positively related to geopolitical risk. The outcomes of the study will be helpful for the investors and financial market players for taking investment decisions. It will also benefit the legislators and policymakers in making policies that could make their respective economies insulated from foreign policy risks.

Suggested Citation

  • Arif, Imtiaz & Rawat, Amna Sohail & Shahbaz, Muhammad, 2020. "Impact of US Economic Policy Uncertainty on Geopolitical Risk. Evidence from BRIC Economies," Public Finance Quarterly, Corvinus University of Budapest, vol. 65(4), pages 485-496.
    • Handle: RePEc:pfq:journl:v:65:y:2020:i:4:p:485-496
    DOI: https://doi.org/10.35551/PFQ_2020_4_3
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    More about this item

    Keywords

    economic policy uncertainty; geopolitical risk; quantile on quantile approach; BRIC economies;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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