Template-Type: ReDIF-Paper 1.0
Author-Name: Yevheniia Bondarenko
Author-X-Name-First: Yevheniia
Author-X-Name-Last: Bondarenko
Author-Name: Nayeon Kang
Author-X-Name-First: Nayeon
Author-X-Name-Last: Kang
Author-Name: Vivien Lewis
Author-X-Name-First: Vivien
Author-X-Name-Last: Lewis
Author-Name: Matthias Rottner
Author-X-Name-First: Matthias
Author-X-Name-Last: Rottner
Author-Name: Yves Schueler
Author-X-Name-First: Yves
Author-X-Name-Last: Schueler
Title: Geopolitical risk in the euro area: measurement and transmission
Abstract: Geopolitical risk is a major concern for the euro area, yet widely used measures largely reflect a US perspective. We introduce a geopolitical risk indicator tailored to the euro area using local European news sources. Shocks to this index have significant recessionary and inflationary consequences in the euro area, effects that would be missed when relying on the corresponding US-based measure. We estimate that the war in Ukraine imposed substantial output losses and inflationary pressures on the euro area in 2022. Combining structural scenario analysis with end-of-sample nowcasting, we show that euro area prospects are highly sensitive to future developments in geopolitical risk. We complement these analyses with two news-based measures of sanctions intensity and shortages for the euro area.
Creation-Date: 2026-05
File-URL: https://www.bis.org/publ/work1348.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work1348.htm
File-Format: text/html
Number: 1348
Keywords: euro area, geopolitical risk, inflation, sanctions, shortages
Classification-JEL: E31, E32, F42, F51
Handle: RePEc:bis:biswps:1348