Geopolitical Risk, Structural Oil Market Shocks, and Macroeconomic Resilience: A Comparison of Emerging and Advanced Economies

Kimia Hassanpour¹ Arina Karami²

1) Undergraduate Student in Economic Sciences, Faculty of Management and Economics, Islamic Azad University, Science and Research Branch, Tehran, Iran
2) Undergraduate Student in Economic Sciences, Faculty of Management and Economics, Islamic Azad University, Science and Research Branch, Tehran, Iran

IOI Code : ABEB-ACABFA
Publication : 4th International Conference on Recent Advances in Engineering, Innovation and Technology - Belgium(eitconf.com)
Abstract :
    This study investigates the differential macroeconomic effects of geopolitical risk transmitted through structural oil market shocks in emerging versus advanced economies. Employing a Bayesian Structural Vector Autoregression (B-SVAR) framework with incomplete identification, augmented by the Caldara-Iacoviello Geopolitical Risk (GPR) index and the AI-based energy GPR sub-index, we analyze monthly data from January 2015 to August 2026 across 28 advanced and 26 emerging economies. Our findings reveal systematic asymmetries: output contractions in emerging economies are approximately twice as severe as in advanced economies, while inflation responses are both larger and more persistent. These differentials are driven by structural factors (energy intensity, supply diversification), policy constraints (fiscal space, monetary credibility), and financial channels (exchange rate dynamics, risk premia). The depletion of resilience buffers—strategic reserves, fiscal space, and conventional monetary policy room—suggests diminished absorption capacity across both economy groups, with emerging economies remaining disproportionately exposed. The results carry significant implications for monetary policy design, fiscal planning, and energy security strategy in an era of intensifying geopolitical fragmentation.

Keywords : geopolitical risk oil market shocks macroeconomic resilience emerging economies advanced economies bayesian svar energy security