Geopolitque
Geopolitical Risk and Market Psychology
Experts say some of the gravest economic effects of the wars in Iraq and Afghanistan are also among the hardest to define quantitatively. Markets build assessments of financial and geopolitical risk into their pricing of just about everything. To the extent that political unrest in Iraq threatens the stability of Middle Eastern and global markets more generally, it also has a broad, though somewhat ambiguous, dampening effect on asset prices. Yale economist William D. Nordhaus outlined the plethora of ways different fallout scenarios from the Iraq war could weigh on the global economy in a December 2002 article in the New York Review of Books. Though Nordhaus quotes cost estimates that have now been surpassed, his general outline of