Do geopolitical tensions between countries influence the cross-border asset allocation of investment funds? Our answer is yes. We estimate gravity models and find that investment funds allocate smaller shares of their portfolios to recipient countries that are geopolitically more distant to...

The global economy is facing increased economic policy uncertainty in a phase of already moderate momentum. The announcements made by the incoming US administration are the main reason for this. However, it is unclear what measures will actually be taken. This forecast is based on the assumption...