IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/32638.html

Are We Fragmented Yet? Measuring Geopolitical Fragmentation and Its Causal Effect

Author

Listed:
  • Jesús Fernández-Villaverde
  • Tomohide Mineyama
  • Dongho Song

Abstract

After decades of rising global economic integration, the world economy is fragmenting. To measure this, we introduce a geopolitical fragmentation index based on a dynamic hierarchical factor model with time-varying parameters and stochastic volatility. We then use structural vector autoregressions and local projections to assess the causal effects of fragmentation. Increased fragmentation negatively impacts the global economy, with emerging economies suffering more than advanced ones. Notably, fragmentation has an immediate negative effect, while the benefits of reduced fragmentation unfold gradually. A sectoral analysis shows that industries closely tied to global markets are more adversely affected. Finally, we highlight significant differences in the effects of fragmentation across geopolitical blocs.

Suggested Citation

  • Jesús Fernández-Villaverde & Tomohide Mineyama & Dongho Song, 2024. "Are We Fragmented Yet? Measuring Geopolitical Fragmentation and Its Causal Effect," NBER Working Papers 32638, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32638
    Note: EFG
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w32638.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • F01 - International Economics - - General - - - Global Outlook
    • F2 - International Economics - - International Factor Movements and International Business
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • F6 - International Economics - - Economic Impacts of Globalization

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:nbr:nberwo:32638. 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: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.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.