Moritz Grebe

Geopolitics in the Boardroom: How German Managers Respond to the War in Ukraine (2024)

with Sinem Kandemir and Peter Tillmann

Abstract: We use unique daily data from the German Business Panel, a survey among German managers, to estimate the impact of uncertainty about the war in Ukraine on managerial plans and expectations. Each workday, the online survey invites a random set of firms to answer a standard set of questions. War-related uncertainty is extracted from a corpus of more than eight million German-language Twitter messages about the war in Ukraine. Higher uncertainty has strong adverse effects by prompting firms to plan higher prices and expect a drop in dividends, revenues, profits and investment. The persistent fall in expected R&D expenditure suggests that the shock has consequences for long-run productivity growth. Managers’ satisfaction with economic policy increases after an uncertainty shock. The sensitivity of managers with respect to war-related uncertainty depends on the overall level of geopolitical risk.

Uncertainty about the War in Ukraine: Measurement and Effects on the German Economy

with Sinem Kandemir and Peter Tillmann,  Journal of Economic Behavior and Organization 217 (2024) 493–506 

Abstract: We assemble a data set of more than eight million German Twitter posts related to the war in Ukraine. Based on state-of-the-art methods of text analysis, we construct a daily index of uncertainty about the war as perceived by German Twitter. The approach also allows us to separate this index into uncertainty about sanctions against Russia, energy policy and other dimensions. We then estimate a VAR model with daily financial and macroeconomic data and identify an exogenous uncertainty shock. The increase in uncertainty has strong effects on financial markets and causes a significant decline in economic activity as well as an increase in expected inflation. We find the effects of uncertainty to be particularly strong in the first months of the war.