Antecedents of war: the geopolitics of low oil prices and decelerating financial liquidity

ABSTRACT

We investigate the joint dynamics of oil prices, financial liquidity and geopolitical risk, within a multi-country global vector autoregressive model. We find that low oil prices are expected to trigger higher levels of geopolitical risk and that decelerating financial liquidity serves as an accelerator.

KEYWORDS:

• Geopolitics
• global liquidity
• oil prices
• global VAR

JEL CLASSIFICATION:

• C32
• E17
• F44
• F47
• O53
• Q43

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ Detailed test results are omitted for space considerations but available upon request.