Geopolitics, Geoeconomics and Risk: A Machine Learning Approach
NeutralArtificial Intelligence
- A novel high-frequency daily panel dataset has been introduced, encompassing markets and news-based indicators such as Geopolitical Risk and Economic Policy Uncertainty across 42 countries. This dataset allows for an analysis of how sentiment dynamics influence sovereign risk, measured through Credit Default Swap spreads, and highlights the predictive power of news-based indicators over traditional economic drivers.
- The development is significant as it enhances the understanding of sovereign risk, particularly in the context of global financial markets. By integrating news-based indicators, the study aims to improve forecasting accuracy, which is crucial for investors and policymakers navigating complex economic landscapes.
- This research aligns with ongoing discussions in the finance sector regarding the impact of geopolitical and economic uncertainties on market behavior. The findings suggest a shift towards incorporating non-linear machine learning methods, such as Random Forests, to better capture the complexities of market sentiment and its implications for risk assessment.
— via World Pulse Now AI Editorial System
