The causal nexus of geopolitical risks, consumer and producer confidence indexes: evidence from selected economies

Pehlivanoğlu, Ferhat; Akdağ, Saffet; Alola, Andrew Adewale

doi:10.1007/s11135-020-01053-y

Cited by 15 publications

(6 citation statements)

References 39 publications

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“…From the reduced economic activities and consumption, the environment could benefit immensely from the corresponding reduction in energy consumption (Anser, Syed, & Apergis, 2021). Several studies have been conducted on the effect of geopolitical risk on economic activities, economic growth (Soybilgen et al, 2019), tourism (Gozgor et al, 2022; Tiwari et al, 2019), oil production (Olanipekun & Alola, 2020; Uddin et al, 2021), production, trade and employment (Caldara & Iacoviello, 2022), consumer and producer confidence (Pehlivanoğlu et al, 2021), energy consumption (Rasoulinezhad et al, 2020), and so forth. Generally, these have found a detrimental effect of geopolitical risks on economic activities.…”

Section: Literature Reviewmentioning

confidence: 99%

The roadmap to net‐zero emission: Do geopolitical risk and energy transition matter?

Acheampong

Aluko

2023

Journal of Public Affairs

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Global crises have heightened policy uncertainties and efforts to address global climate change. Limited evidence exists in the literature on geopolitical risk's direct and indirect roles in addressing global emissions. In this study, we examine whether geopolitical risk could impede or facilitate efforts to attain a net‐zero emissions target through energy transition using panel data for 42 countries from 1990 to 2020. Various econometric techniques were applied in this study to present robust findings and reliable conclusions. Estimates from the Driscoll‐Kraay, Lewbel two‐stage least squares and method of moment regression techniques consistently showed that countries' geopolitical risk directly increases emissions (total greenhouse gas, carbon, methane, and nitrous oxide). At the same time, energy transition, measured with renewable energy consumption, mitigates these emissions. In addition, evidence from the partial linear functional‐coefficient model technique indicates that renewable energy consumption consistently mitigates emissions when geopolitical is minimal (at a minimum and mean level). However, the role of renewable energy consumption in reducing emissions becomes weaker when geopolitical risk is heightened—thus, when geopolitical risk reaches its maximum level. We recommend that efforts to sustain renewable energy transition and maintain geopolitical stability are vital for achieving net‐zero emissions and climate change mitigation.

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Section: Literature Reviewmentioning

confidence: 99%

The roadmap to net‐zero emission: Do geopolitical risk and energy transition matter?

Acheampong

Aluko

2023

Journal of Public Affairs

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“…The implications for the governments of a negative or positive sentiment rely on their choices in monetary or fiscal policies in a domestic dimension as well as on their decisions about foreign affairs. Caldara and Iacoviello (2008) stated that the geopolitical risks affect financial markets and business cycles, and recently Pehlivanoğlu et al (2021) analysed the effects of the resulting uncertainty on consumer and business sentiment. Confidence indicators offer valuable insights into this sentiment.…”

Section: Concluding Remarks and Policy Implicationsmentioning

confidence: 99%

Mixed frequency composite indicators for measuring public sentiment in the EU

et al. 2022

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Monitoring the state of the economy in a short time is a crucial aspect for designing appropriate and timely policy responses in the presence of shocks and crises. Short-term confidence indicators can help policymakers in evaluating both the effect of policies and the economic activity condition. The indicator commonly used in the EU to evaluate the public opinion orientation is the Economic Sentiment Indicator (ESI). Nevertheless, the ESI shows some drawbacks, particularly in the adopted weighting scheme that is static and not country-specific. This paper proposes an approach to construct novel composite confidence indicators, focusing on both the weights and the information set to use. We evaluate these indicators by studying their response to the policies introduced to contain the COVID-19 pandemic in some selected EU countries. Furthermore, we carry out an experimental study where the proposed indicators are used to forecast economic activity.

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“…For example, the relationship between GPR and economic growth/tourism, 7-9 GPR and energy consumption, 10 GPR and financial markets, 11 GPR and research and development, 12 GPR and investments, 13 GPR and oil production, 14 as well as GPR and consumer/producer confidence. 15…”

Section: Introductionmentioning

confidence: 99%

“…There are a few studies on the link between GPR and CO 2 emissions, which use indicators of GPR such as political tension, terrorism and war. Based on the findings by researchers such as, 16-19 terrorism, war and political tension as indicators of GPR can either heighten or reduce CO 2 emissions. The existing literature on the nexus between GPR and the environment however has a number of limitations.…”

Section: Introductionmentioning

confidence: 99%

“…For example, the relationship between GPR and economic growth/tourism, [7][8][9] GPR and energy consumption, 10 GPR and financial markets, 11 GPR and research and development, 12 GPR and investments, 13 GPR and oil production, 14 as well as GPR and consumer/producer confidence. 15 Apart from its impacts on economic activities and growth, GPR also affects the environment. In this paper, two channels are highlighted through which the environment can be affected by GPR.…”

Section: Introductionmentioning

confidence: 99%

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Interaction among geopolitical risk, trade openness, economic growth, carbon emissions and Its implication on climate change in india

Adebayo

Akadırı²,

Riti

et al. 2022

Energy & Environment

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In this paper, we examine whether geopolitical risk influences environmental degradation, while controlling for non-renewable energy consumption, economic growth and trade openness, using a quarterly dataset from 1985Q1 to 2019Q4. The choice of India as a case study is based on a number of reasons. India is a developing country, which produces approximately 3.2% of global GDP. Also, India produces almost 17.7% of the world population. The country also emits about 6.8% of global carbon emissions, and according to the 2020 report of the consulting firm Eurasia, India is ranked fifth in terms of geopolitical risk. This study adds to the existing literature by using the quantile-on-quantile (QQR) regression to examine the effect of geopolitical risk on environmental degradation, as well as highlighting the implications of geopolitical risk on environmental sustainability. Based on empirical estimation, we find that geopolitical risk increases and decreases carbon emissions in India. That is, geopolitical risk increases environmental degradation at middle quantiles and decreases environmental degradation at lower and higher quantiles. In addition, we find that non-renewable energy consumption, economic growth and trade openness impede environmental quality in India. Thus, we are of the opinion that policymakers, when making policy decisions on environmental quality, should factor in geopolitical risk in two areas, mitigation and channel of escalation, among other policy suggestions.

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The causal nexus of geopolitical risks, consumer and producer confidence indexes: evidence from selected economies

Cited by 15 publications

References 39 publications

The roadmap to net‐zero emission: Do geopolitical risk and energy transition matter?

The roadmap to net‐zero emission: Do geopolitical risk and energy transition matter?

Mixed frequency composite indicators for measuring public sentiment in the EU

Interaction among geopolitical risk, trade openness, economic growth, carbon emissions and Its implication on climate change in india

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