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Geopolitical risk and inflation: the role of energy markets
[Risque géopolitique et inflation : le rôle des marchés de l’énergie]

Author

Listed:
  • Marco Pinchetti

Abstract

Not all geopolitical shocks hit the economy in the same way – and that matters, especially for their transmission to inflation. This blog post, based on a recent Banque de France working paper, proposes a novel methodology to decompose geopolitical risk fluctuations into geopolitical energy shocks and geopolitical macro shocks. Tous les chocs géopolitiques n’affectent pas l’économie de la même manière – et c’est un point important, en particulier s’agissant de leur transmission à l’inflation. Ce billet de blog, qui s’appuie sur un récent document de travail de la Banque de France, propose une méthodologie novatrice pour décomposer les fluctuations du risque géopolitique en chocs géopolitiques énergétiques et chocs géopolitiques macroéconomiques.

Suggested Citation

  • Marco Pinchetti, 2025. "Geopolitical risk and inflation: the role of energy markets [Risque géopolitique et inflation : le rôle des marchés de l’énergie]," Eco Notepad 420, Banque de France.
    • Handle: RePEc:bfr:econot:420
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    File URL: https://www.banque-france.fr/en/publications-and-statistics/publications/geopolitical-risk-and-inflation-role-energy-markets-0
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    File URL: https://www.banque-france.fr/fr/publications-et-statistiques/publications/risque-geopolitique-et-inflation-le-role-des-marches-de-lenergie-0
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    Citations

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    Cited by:

    1. Brignone, Davide & Gambetti, Luca & Ricci, Martino, 2024. "Geopolitical risk shocks: when size matters," Working Paper Series 2972, European Central Bank.
    2. Gökhan Çobanoğulları, 2026. "Geopolitical Risk, Military Expenditure, and Inflation Linkage in Türkiye: Insights from Wavelet-Partial Coherence Analysis," Computational Economics, Springer;Society for Computational Economics, vol. 68(1), pages 437-455, July.
    3. Antoine Cornevin, 2025. "Geopolitical Risks and Economic Expectations: The Role of Trade Linkages," IHEID Working Papers 11-2025, Economics Section, The Graduate Institute of International Studies.
    4. Anttonen, Jetro & Lehmus, Markku, 2025. "Geopolitical surprises and macroeconomic shocks: A tale of two events," Bank of Finland Research Discussion Papers 5/2025, Bank of Finland.
    5. Emna Trabelsi, 2025. "Monetary Policy Transmission Under Global Versus Local Geopolitical Risk: Exploring Time-Varying Granger Causality, Frequency Domain, and Nonlinear Territory in Tunisia," Economies, MDPI, vol. 13(7), pages 1-68, June.
    6. Bettendorf, Timo, 2025. "Disentangling supply-side and demand-side effects of uncertainty shocks on U.S. financial markets: Identification using prices of gold and oil," Discussion Papers 10/2025, Deutsche Bundesbank.
    7. Monti, Francesca & Van Keirsbilck, Leila, 2025. "The Transmission of Shocks across Sectors and the Dynamics of Sectoral Prices," CEPR Discussion Papers 20621, Centre for Economic Policy Research.
    8. Bondarenko, Yevheniia & Kang, Nayeon & Lewis, Vivien & Rottner, Matthias & Schüler, Yves, 2026. "Geopolitical Risk in the Euro Area: Measurement and Transmission," CEPR Discussion Papers 21409, Centre for Economic Policy Research.

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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