Does political risk matter for economic and financial risks in Venezuela?

Abstract

In this paper, the time–frequency dependency of political risk as well as economic and financial risks is explored in Venezuela using quarterly data from 1984Q1 to 2018Q4. The present study uses the wavelet coherence technique, which allows the investigation of both the long and short-term causal relationships between political risk and economic and financial risks in Venezuela. The findings of this study indicate that: (i) significant vulnerabilities in political risk, economic risk, and financial risk are observed at different time periods and different frequency levels; (ii) political risk has a strong power for explaining economic risk from 1995 to 2005 in the long run, while between 1984 and 2010, economic risk and political risk are positively correlated at different frequency levels; (iii) in the long run, changes in political risk significantly lead to changes in financial risk in Venezuela.

Natural resources commodity prices volatility and economic performance: Evidence from China pre and post COVID-19

“…The thick contour line demonstrates the significance level of 5%, obtained via Monte Carlo simulation. The colors mentioned in the power spectrum vary from blue to red, indicating the lowest power to the highest power ( Kirikkaleli, 2020 ). As the recent study is about to cover the pre and post Covid-19 period, thus the only higher wavelet power spectrum for the economic performance is found in the peak of the Covid-19 period.…”

Co-movement of commodity price indexes and energy price index: a wavelet coherence approach

“…Torrence and Compo (1998) proposed a tool to explore the wavelet coherence via deferment indicators in the fluctuation of two-time series. We can distinguish positive and negative correlation by Kirikkaleli (2020) where L indicates an imaginary operator, and O is a real-part operator.…”

İktisadi, Finansal ve Politik Risklerin Türkiye CDS Primine Etkileri

“…The data for economic, financial and political risks have been obtained from the ICRG, while the data for CDS have been obtained from the Bloomberg. Because ICRG presents comprehensive risk structure for a country with ratings for its economic, financial and political risks, most authors used the ICRG data in their research (Howell & Chaddick, 1994;Erb, Harvey and Viskanta, 1996;Assane & Grammy, 2003;Harvey, 2004;Hoti, 2005;Busse & Hefeker, 2007;Lehkonen & Heimonen, 2015;Nawaz, 2015;Hakimi & Hamdi, 2017;Asif & Majid, 2018;Aziz, 2018;Filippou, Gozluklu & Taylor, 2018;Kirikkaleli, 2020;etc.). Economic, financial and political risk ratings provided by ICRG are scored between 0-50, 0-50 and 0-100, respectively (for more information see, Howell, 2011).…”