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Geopolitical risk and inflation: Does central bank independence matter?

Author

Listed:
  • Whelsy Boungou

    (PSB - Paris School of Business - HESAM - HESAM Université - Communauté d'universités et d'établissements Hautes écoles Sorbonne Arts et métiers université)

  • Stevy Darel Moussavou Moussavou

    (BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Bossoma Doriane N’doua

    (ESCE PARIS)

Abstract

Does central bank independence shape the inflationary impact of geopolitical risk? Using a panel of 29 countries over 1990-2023, we show that geopolitical risk significantly increases inflation, but that this effect depends on the degree of central bank independence. Higher institutional credibility substantially attenuates, and in some case offsets, the inflationary impact of geopolitical shocks. This moderating effect is stronger for geopolitical threats than for realized actions and is considerably more pronounced in advanced than in emerging economies. These findings highlight the importance of credible monetary institutions in enhancing resilience to geopolitical inflation.

Suggested Citation

  • Whelsy Boungou & Stevy Darel Moussavou Moussavou & Bossoma Doriane N’doua, 2026. "Geopolitical risk and inflation: Does central bank independence matter?," Post-Print hal-05737917, HAL.
    • Handle: RePEc:hal:journl:hal-05737917
    DOI: 10.1016/j.econlet.2026.113171
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