We examine the effects of geopolitical risk and economic policy uncertainty on shipping freight rates using a Bayesian VAR model
2020
Key concepts
Scholarcy highlights
- Shipping freight rates are linked tightly to the global real economic activity and the global demand for commodities
- We examine the effects of geopolitical risk and economic policy uncertainty on shipping freight rates using a Bayesian VAR model
- Positive shocks to EPU indices for the U.S, Brazil, and China trigger a negative response of dry bulk shipping freight rates that builds gradually over several months
- Positive shocks on the GPR indices of Brazil and China trigger responses on all freight rates that are smaller in magnitude and weaker in terms of statistical significance
- This study contributes to the literature by quantifying the effects of geopolitical risk and economic policy uncertainty on shipping freight rates, a key indicator variable of global trade
- Our results reveal that the effects of positive shocks on EPU and GPR on shipping freight rates can differ dramatically
- These findings have important economic and managerial policy implications for players in the global shipping industry
Need more features? Save interactive summary cards to your Scholarcy Library.