Risk and Uncertainty Measures

VIX, Economic Policy Uncertainty, and Geopolitical Risk:

Figure 1: VIX (blue, left scale), and Economic Policy Uncertainty index, 7 day centered moving average (pink, right scale). Source: CBOE via FRED, policyuncertainty.com.

Note that the EPU has not been released for about a week.

Figure 2: VIX (blue, left scale), and Geopolitical Risk index – Threats (red, right scale). Source: CBOE via FRED, Caldara and Iacoviello.


Figure 3: VIX (blue, left scale), and Geopolitical Risk index – Acts (red, right scale). Source: CBOE via FRED, Caldara and Iacoviello.

22 thoughts on “Risk and Uncertainty Measures

  1. pgl

    Kevin Drum catches someone in the NYTimes talking about Russia’s power military and has some different thoughts:


    ‘In other words, Russia has a kick-ass military. That’s why they keep winning. IANARE, but doesn’t this miss a tiny little something? Namely that until now Putin has fought only tiny little wars. Of course he’s won in South Ossetia and Crimea and—if you stretch the definition of “win” considerably—Syria. This is like congratulating the United States for winning in Grenada and Kosovo. Big deal.

    Having extremely limited and specific objectives is an excellent military strategy, and that’s why Putin has won so many wars. But it says nothing about how good Russia’s military is when it decides to fight a big war with unclear objectives. They are now trying to do approximately what we tried to do in Iraq, and only time will tell if they succeed. But they might. It’s likely that the Russian war in Ukraine will eventually turn into a counterinsurgency, and my read of history suggests that the only way for a counterinsurgency to succeed is to embrace ruthless brutality. It’s to America’s credit that we were never willing to go completely down that path in Iraq, but it’s quite possible that Putin is. If he does, he will be more of a pariah than ever but he might just win. Ask the Chechnyans.’

    But didn’t expert on everything Princeton Steve tell us there would be no insurgency in Ukraine? Oh dear – no one seems to agree with Stevie!

    1. Anonymous

      That beast, with the shape of a lion’s body and ‘a gaze blank and pitiless as the sun’ has since moved from devouring the carcass of Yugoslavia into Afghanistan, Iraq, Georgia, Libya, Syria, Somalia, et al, and arrived in Ukraine in 2014.

      stingers and javelins for the beast’s proxies……

      ‘from yeats’

    1. 2slugbaits

      Macroduck Shortly before the invasion I made similar comments regarding border support to insurgencies as well as the very strong possibility of things spilling over into Belarus. I’m also curious about the Kaliningrad oblast. With Russia bogged down in Ukraine this seems like it might be a good time for those Russian speakers to seek independence if they want to remain a free trade zone.

      1. Moses Herzog

        John Kirby made some semi-cryptic comments on things the U.S. was giving Ukraine they weren’t going to make public at this point. Could have been something as simple as food shipments. I thought it was interesting though.

      2. Anonymous

        according to who the cia can arm.

        belarus does not have the collaboration with hitler experience ukraine has

    2. pgl

      “The Coming Ukrainian Insurgency
      Russia’s Invasion Could Unleash Forces the Kremlin Can’t Control”

      Your comment of course refers to the Village Idiot formerly from Princeton Steve. Most of us are hoping this insurgency becomes something the Kremlin cannot control but we know if Putin fails, trolls like Bruce Hall will have egg all over their face.

      This is the most series issue of our day (behalf save COVID-19) which is why this excellent blog should be not tarnished with the evil intellectual garbage from the Usual Suspects.

    1. macroduck

      Are you this low? Menzie is taking war in Ukraine seriously. You repeat your simple-minded blather while people die. Shut up.

  2. 2slugbaits

    Has anyone else noticed how many Russian missiles appear to have missed their targets? And there are plenty of videos showing dud missiles that failed to explode. One just buried itself into a children’s playground.

    1. Moses Herzog

      I’m going to give you a blunt answer on this and hope you don’t take it wrong. I suspected the same thing. But the more I think on it, I think they are also hitting many things that they indeed want to hit. And it’s way too early to say whether there is a systemic or wide cause on what you stated. But what my best theory is on it at this point~~I have no factual or tangible data to back this up, 100% conjecture on my part~~is that many of us have so much empathy for Ukrainians and are pulling for Ukrainians success and safety so hard, that we are letting our emotions grab onto things like missiles that didn’t explode etc as being more than they are,

      1. 2slugbaits

        Well, the Russian military has a long history of quality problems. The classic example of bad quality would be the old Soviet ICBM launch controls. They were so bad and we had such low confidence in their ability to prevent an accidental launch that the US military deliberately “leaked” highly classified design plans for our own launch controls in hopes that the Soviets would use ours instead of theirs. And after the Cold War the US Army was surprised at just how crappy Soviet tanks really were.

  3. pgl

    One thing is clear. The citizens of Ukraine despise Putin and will do whatever it takes to keep this tyrant for occupying their homeland. Another thing is clear – most of the world including a lot of decent Russians abhor this invasion. The world should stand against Putin. But something else of coming out unfortunately – Trump and his fanboys (a few that write garbage here) see Putin’s horrific actions as a chance to push their Trumpian agenda which of course includes wiping Putin’s rear end.

    Times like this are a time to choose what kind of world one wants to live in. I choose to stand with the good citizens of Ukraine.

    1. Pgl

      I hate to break this to the Putin Trump fan boys here but Malcolm Vance is making the case that Putins invasion will ultimately fail

      1. Moses Herzog

        Navy man, eh?? Navy guys tend to be sharper than the Army guys. I hope he’s right. I think it’s way way way way too early to tell though. Certainly some glimmers of hope there.

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