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This paper aims to explore the spillover impacts that domestic or global aspects of geopolitical risk generate on uncertainty. The latter is derived from a spectrum of different sources in the USA (economic policy, monetary policy, fiscal policy, national security, government spending, taxation) from 1985 up to November 2022.

Vector autoregressive schemes are used to detect causality and reverse causality between each aspect of geopolitical risk and each source of US uncertainty.

Notably, national security generates higher geopolitical risk by almost 8% in the first month but decreases GPR by 2% in the third month after the shock. USA is found to constitute a cornerstone as regards global peace and that the overall economic or monetary conditions or war status in the USA are remarkably more influential toward domestic and global geopolitical uncertainty than separate strands of fiscal policymaking. Reverse causality displays sizably weaker effects overall.

This study sheds light on the determinants of geopolitical risk and domestic instability by an international perspective and provides a compass for better decision-making for fiscal and monetary policymakers and market participants.

In this work, the authors analyze the dynamic interdependencies between military expenditures and the real economy for the period 1970–2018, and the authors' approach allows for the existence of dominant economies in the system.

In this study, the authors employ a Network General Equilibrium GVAR (global vector autoregressive) model.

By accounting for the interconnection among the top twelve military spenders, the authors' findings show that China acts as a leader in the global military scene based on the respective centrality measures. Meanwhile, statistically significant deviations from equilibrium are observed in most of the economies' military expenses, when subjected to an unanticipated unit shock of other countries. Nonetheless, in the medium run, the shocks tend to die out and economies converge to an equilibrium position.

With the authors' methodology the authors are able to capture not only the effect of nearness on a country's military spending, as the past literature has documented, but also a country's defense and economic dependencies with other countries and how a unit's military expenses could shape the spending of the rest. Using state-to-the-art quantitative and econometric techniques, the authors provide robust and comprehensive analysis.

The use of remotely piloted aerial vehicles (RPVs) as a counterterrorism strategy is intensely debated on grounds of legitimacy, political feasibility and human rights. This study aims to contribute to the understanding of the link between RPVs’ strikes and terrorism through evidence-based analysis.

Using insights from economic analysis of counterterrorism, the study hypothesized possible channels through which RPVs may increase costs for terrorism. A novel data set is gathered to empirically test the theory-consistent prediction of a negative link between RPVs’ strikes and terrorism in a multivariate econometric framework.

Focusing on RPVs’ strikes in Pakistan over 2008 to 2013, the analysis yields important new insights. The principal finding suggests that RPVs reduce overall terrorism, while, without negating the negative spillover effects of RPVs use, there is no evidence of a positive feedback from civilian casualties to terrorism. These findings are not driven by extreme observations and satisfy a number of conventional diagnostic checks.

A well-constructed comparison and empirical evidence in this study implies that RPVs may yield net benefits in terms of greater security at regional and national levels.

Moreover, as a proactive counterterrorism measure, RPVs can be an effective policing tool in crowded urban areas facing the greater threat of terrorism.

The study is the first to systematically analyze the link between RPV strikes and the magnitude of terrorism. The groundbreaking analysis thus extends the scope of economic inquiry to the role of RPVs as a counterterrorism strategy at national, regional and global levels. The findings of the study cast doubt on the validity of many popular notions about RPVs strikes, as they find little support in the empirical analysis.

Pakistan suffered with the menace of terrorism for long and become a front line state in the “War on Terror”. Terrorism shattered Pakistan economy and rendered her external sector vulnerable to instability and uncertainties.

Therefore, using system generalized method of moment (GMM), this paper investigates the impact of foreign direct investment (FDI) on exports, imports and trade deficit in the face of unabated terrorism in Pakistan.

The findings of the paper suggest that as terrorism in Pakistan increased, FDI contribution to Pakistan exports decreased while FDI contribution to Pakistan imports significantly increased. Terrorism also disrupted the chain of local production and increased Pakistan reliance on imports. Thus terrorism widened Pakistan trade deficit of Pakistan and expose Pakistan to external imbalances.

Despite rise in organized acts of terrorism and its adverse impact on various departments of economy, hardly any study bothers to check its impact on trade and investment nexus. This is the first study of its nature that looks deep down to understand how terrorism affects the relation of major economic variables.

This paper aims to investigate the impact of 75 announcements of environmental policies on British equities over the period 2003 to 2012. In particular, the research has the following specific objectives: finding out whether there is wealth creation/destruction for investors as a result of the announcements of green policies and identifying changes in risk structure following the introduction of green policies.

Using event study methodology and non-parametric tests, the authors attempt to find out whether announcements of environmental/sustainability policies are value constructive or destructive for equity investors. The CAPM is fitted with interaction variables to measure the change in systematic risk following announcements.

The results show that the UK market is particularly sensitive to domestic, international and nuclear announcements. Cumulative abnormal returns in the range of 30-40 per cent were recorded in certain sectors. Consistent with the emerging literature, the authors observe that environmental policies induce changes in the systematic risk of businesses, both in the short run and the long run.

To the best of authors’ knowledge, the literature does not provide any answer as to how the risk and return of British equity portfolios change following the announcement of green policies in the aftermath of the Kyoto Protocol on climate change. Furthermore, the literature does not differentiate among various categories of announcements (domestic, international and nuclear). Therefore, this paper bridges the gap in the literature on these two grounds.

Among the many perspectives to analyze war, such as rational actor, organizational process, governmental politics and ethics, the perspective that actually incorporates the costs and benefits into a systematic theoretical structure has hardly been analyzed. The purpose of this paper is to analyze the costs and benefits perspective.

Three kinds of value are distinguished, i.e. human, economic and influence. Different actors (politicians, populations, stakeholders, etc). assign different weights to the three kinds of value. Six gradually more complicated models are developed. The first subtracts losses from gains for the three kinds of value. Thereafter, the paper accounts for multiple periods, time discounting, attitude towards risk, multiple stakeholders, subcategories for the three kinds of value, sequential decision-making and game theory.

The rich theoretical structure enables assessing costs and benefits more systematically and illuminatingly. The cost benefit analysis is illustrated with the 2003-2011 Iraq War. The paper estimates gained and lost value of human lives, economic value and influence value, and show how different weights impact the decision of whether to initiate war differently.

The paper provides scientists and policy makers with a theoretical structure within which to evaluate the costs and benefits of war, accounting for how different actors estimate weights, the future, risk and a variety of parameter values differently.

The findings would help in designing useful and relevant hedging strategies against geopolitical risks (GPRs), which are rampant in the Gulf Cooperation Council (GCC) region.

This study focuses on the regional and global costs of GPRs for businesses in the Gulf region.

The results of the analysis show that the time-varying conditional correlation between the stock returns of the GCC countries and the Saudi Arabian geopolitical risk is consistently negative, suggesting that the Saudi Arabian geopolitical risk hurts the GCC stock markets, thus underscoring the importance of studying regional GPRs.

The contribution of this paper is twofold: First, it uses a newly geopolitical risk index that includes recent geopolitical events not included in the Caldara and Iacoviello (2018) index. In addition to war threats and acts, terrorist threats and acts and nuclear threats, the authors consider global trade tensions (GTTs), Saudi Arabia's geopolitical risk and OPEC news mainly related to OPEC oil production levels. Second, it assesses whether Saudi Arabia, which is the largest economy in the region and the main global oil exporter, is really a risk exporter to the rest of the GCC countries.

This study aims to examine the impact of terrorism on return and systematic risk of Pakistan’s equity industries. Daily data from 1 January 2000 to 31 December 2014 for 12 industries based on the specific types of companies listed on Karachi Stock Exchange are used for the empirical analysis.

A multiplicative (additive) term is introduced in the standard capital asset pricing model to examine the change in systematic risk (industry returns) in response to the terrorist activities. The authors use the multiscale beta approach (Yamada, 2005) and the maximal overlap discrete wavelet transform (MODWT) to test the heterogeneous market hypothesis.

Terrorism activities increase the systematic risk for most of the industries and the negative impact on returns of banks and the financial industry. It is noted that terrorism positively impacts (increases) the industrial systematic risk mainly in short-run (between two and four days-time horizon).

The paper examines the impact of terrorism on a broad list of industries’ (banks, basic materials, chemicals, construction, consumer goods, consumer services, financials, industrials, minerals, oil and gas, textile and utilities) risk and return in Pakistan, using the multiscale beta approach (Yamada, 2005) and the MODWT methods.

The Department of Defense (DOD) has long partnered with universities and other nonprofit organizations to perform early-stage, military-related research using research centers established under long-term contracts known as Federally Funded Research and Development Centers (FFRDCs). Over the last 25 years, there has been a shift in the type of arrangement used to University Affiliated Research Centers (UARCs) that this paper argues is the result of bureaucrats acting as evasive entrepreneurs in response to changing regulations.

Extending the theory of evasive entrepreneurship to bureaucrats, the author shows how regulations increase the cost of bureaucratic action and incentivize the creation of substitute actions to avoid those regulatory costs and capture benefits. Qualitative evidence from DOD documents is used to support the contention that UARCs serve the same function as FFRDCs. Quantitative evidence on the number of FFRDCs and UARCs and their funding illustrates how bureaucrats respond to political restrictions.

Bureaucrats have little to no recourse to respond to budgetary cuts or spending ceilings. In the case of FFRDCs, spending ceilings were introduced starting in the 1960s and led to a decline in the number of DOD FFRDCs. Bureaucrats can however strategically evade new regulations by reorganizing transactions justified by existing federal law that contradicts new regulations. Once FFRDCs were federally regulated in 1990 there were strong incentives to create substitute arrangements leading to the creation of UARCs in 1996 that have ultimately replaced FFRDCs as the research center of choice for the DOD.

The article makes three contributions. First, it applies the concept of evasive entrepreneurship to a political context and then use that framework to understand the creation and establishment of the DOD's UARCS. Second, the organizational features and purpose of UARCs are analyzed. Third, the evidence provided shows how regulations resulted in a shift in the DOD's R&D strategy toward working with universities.

This paper aims to investigate the financial aspects of the Islamic State of Iraq and Syria (ISIS), its sources of financing and the management of funds in a State-like apparatus.

It is argued that ISIS constitutes a phenomenon not only due to the extreme violence, instrumentalized via “marketing” methods but also on grounds of its declared aspiration to occupy and control land and population with ever expanding borders. After analyzing the group’s sources of funding which are closely interlinked to the areas it controls and its coordinated efforts to establish a proto-terror state framework, a strategy for addressing this threat based on international practices and decisions is being highlighted.

ISIS represents a “sui generis”, primarily self-funded State Scale Entity, a case study for Defense and Security Geo-economics. Its “economic model”, an amalgam of terrorist and criminal practices, could not be used for a viable proto-state it aspires to be.

No official data of any kind are available by international recognized organizations or bodies. The sources for this paper are primarily Western media, journalists, indirect habitants’ testimonies and very few official reports.

Caution must be exercised, when using even trivial platforms of social media and mobile applications, linked even remotely with ISIS or its affiliates.

This paper is a comprehensive presentation of the economic facets of this first modern endeavor for a terror-state.