IDEAS home Printed from https://ideas.repec.org/p/gii/giihei/heidwp11-2025.html
   My bibliography  Save this paper

Geopolitical Risks and Economic Expectations: The Role of Trade Linkages

Author

Listed:
  • Antoine Cornevin

    (Geneva Graduate Institute (IHEID), Department of International Economics)

Abstract

I study the impact of domestic and foreign geopolitical risk (GPR) on economic expectations, and how trade linkages affect the transmission of foreign risks. Using monthly professional forecasts since 1995, I start by estimating the effect of GPR events on the distribution of expectations across 32 advanced and developing economies. I find that while changes in GPR do not shift median GDP forecasts, they increase their dispersion. I then assess how trade substitutability and concentration influence the cross-country transmission of GPR. I construct new countrylevel indicators based on granular product-level trade data and find that countries which have exports that are easy to substitute (the international demand for these exports is elastic) are more affected by foreign GPR shocks. Perhaps surprisingly, for these countries, foreign GPR shocks dominate domestic GPR shocks.

Suggested Citation

  • 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.
    • Handle: RePEc:gii:giihei:heidwp11-2025
    as

    Download full text from publisher

    File URL: http://repec.graduateinstitute.ch/pdfs/Working_papers/HEIDWP11-2025.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    Geopolitical risks; economic expectations; uncertainty; trade linkages;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gii:giihei:heidwp11-2025. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dorina Dobre (email available below). General contact details of provider: https://edirc.repec.org/data/ieheich.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.