Role of Energy Policy in Shaping German-Russian Relations through Economic Policy Uncertainties: Insights from the Russo-Ukrainian War

We shed light on the German-Russian relationship, focusing on the complexities that underlie their economic policy uncertainties over the period 1994-2023. We start with static unconditional correlation and dynamic conditional correlation analyses to examine the strength and temporal variations in the correlation between economic policy uncertainties of these two major countries. We then utilize standard and time-varying Granger causality analysis to uncover causal relationships. Importantly, we use a novel energy policy uncertainty index for Germany to explore interconnections between economic and energy policy uncertainties. We emphasize the importance of incorporating energy policy uncertainty in economic policy decision-making and international cooperation.