Insights on Constructing Geopolitical Risk Audit

Details on constructing the audit for the paper "Measuring Geopolitical Risk" by Dario Caldara and Matteo Iacoviello are outlined. It covers the process of building the GPR index, designing the audit sample, and coding articles to identify geopolitical risks discussed in newspapers. The methodology involves sampling articles discussing high or rising geopolitical risks to create a benchmark GPR index, as well as expanding the sample to include articles mentioning adverse geopolitical events. The notes provide guidelines on how to code articles based on their content regarding current or expected geopolitical risks, terrorism acts, war risks, and more.

• Geopolitical Risk
• Audit Construction
• GPR Index
• Article Coding
• Research

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1. PERSONAL/NONWORK // EXTERNAL Notes on Constructing the Audit These notes describe details about the audit in the paper Measuring Geopolitical Risk by Dario Caldara and Matteo Iacoviello

2. PERSONAL/NONWORK // EXTERNAL Construction of the Index Each month the universe of newspapers that we use to construct our GPR index contains about ten of thousands of articles articles. This is set U. Of these, only about 3 percent (see Table A.2) meet our computer- generated criterion to be included in the GPR index. This is set G. Each month, The ratio G/U (appropriately normalized) is our baseline GPR index.

3. PERSONAL/NONWORK // EXTERNAL Design of the audit sample Benchmark GPR Index SAMPLING FROM GPR ARTICLES (set G) We sample a subset of the articles that are identified as discussing high or rising geopolitical risks. We code these articles as GPR=1, GPR=0, GPR=-1, as follows: 1 = the article contains references to high or rising geopolitical risks. 0 = the article contains no references to geopolitical risks, or is uninformative whether geopolitical risks are rising or falling. -1 = the article contains references to low or declining geopolitical risks.

4. PERSONAL/NONWORK // EXTERNAL Design of the audit sample Expanded Sample Sampling from GPRE ARTICLES (set E) We sample from the universe of newspapers a subset of articles which is sufficiently large to include articles that are likely to be GPR=1 articles. This is set E, and contains about [ 15% ] of the articles in sample U. The ratio E/U is the GPRE index. The subset is constructed sampling articles that contain any of these 4 words (roots): military OR war OR geopolitical OR terroris*. We code these articles as GPR=1 or GPR=0, as follows: 1 = the article contains references to adverse geopolitical events. 0 = the article contains no references to adverse geopolitical events.

5. PERSONAL/NONWORK // EXTERNAL How to Code Articles General Principle If the article discusses or highlights recent past, or current or future expected geopolitical risks, terror risks, war risks, terror acts, or current wars, label it as 1. Example: https://search.proquest.com/docview/1748535069?accountid=39704 A nightmare scenario in the Mideast, The Washington Post, Dec 14, 2015: .. The wars in Syria and Iraq and jihadist attacks in the West have obscured yet another Middle East threat: the possibility that slowly escalating violence between Palestinians and Israelis will destroy one of the few remaining zones of relative tranquility between Morocco and Iran . This article is coded as 1.

6. PERSONAL/NONWORK // EXTERNAL How to Code Articles General Principle (Continued) If the article discusses declining tensions, label it as -1. Example of article coded as -1 In East Europe, stunning change : Dramatic change swept Eastern Europe in 1989, first gathering force in Poland and Hungary, then spreading to East Germany and Czechoslovakia as the Soviet Union continued to loosen the iron grip with which it has dominated its neighbors since the end of World War II. https://search.proquest.com/docview/282685288?accountid=39704, Chicago Tribune, Dec 27, 1989

7. PERSONAL/NONWORK // EXTERNAL How to Code Articles Books and Reviews If the articles does not highlight any of these risks, including book or movie reviews except when highlighting risks associated to them, label it as 0. E.g. Books of The Times; Black Military History in the U.S.: No Longer the Untold Story , New York Times, Dec 23, 1989, https://search.proquest.com/docview/427465416?accountid=39704 coded as 0 since it mostly covers Vietnam s war E.g. Books of The Times; A Nuclear Pragmatist Offers Hope , New York Times, Dec 15, 1988, https://search.proquest.com/docview/427011256?accountid=39704, coded as 1 as the review discusses the author s assessment of current nuclear risks.

8. PERSONAL/NONWORK // EXTERNAL How to Code Articles Obituaries/Death Notices* The GPR algorithm excludes articles found in a publication s obituaries section. Occasionally, newspapers publish obituaries for certain high-profile figures in other categories reserved for news. If the articles does not highlight any of these risks, including obituary, except when highlighting risks associated to them, label it as 0. E.g. Major-General Derrick Wormald, Obituary , The Times; London, Apr 5, 1994, https://search.proquest.com/docview/318127277?accountid=39704 coded as 0 as it recounts a death with little/no geopolitical significance. E.g. The World; Imam s Death Puts A Region On Edge , The Times; London, Apr 5, 1994, https://search.proquest.com/docview/422126099?accountid=39704 coded as 1 as the reported individual s death instigates regional strife.

9. PERSONAL/NONWORK // EXTERNAL How to Code Articles Historical Accounts and Anniversaries If the articles does not highlight any of these risks, including anniversaries/historical accounts except when highlighting risks associated to them, label it as 0. E.g. Moments That Make History , The Times; London, Dec 31, 2001, https://search.proquest.com/docview/318584735?accountid=39704 coded as 0 as the article historicizes 9/11 without discussing current developments. E.g. Analysis: Death From Afar, There s A Long History Of Us Military Mistakes. They Destroyed A Cambodian Town Like That In 1973 , The Guardian, Apr 21, 1999, https://search.proquest.com/docview/245380083?accountid=39704 coded as 1 as it assets the connection between current and past conflicts.

10. PERSONAL/NONWORK // EXTERNAL How to Code Articles Tensions and Markets Note: If using the -1/0/1 scale, only code articles -1 if they discuss easing tensions, not if they discuss market strength despite tensions: E.g. Report: Stocks Leap as Fear Over Ukraine Eases , Wall Street Journal, Aug 19, 2014, https://search.proquest.com/docview/1553962294?accountid=39704 coded as -1 as it explicitly discusses the decline of geopolitical risk. E.g. Market Roundup; S&P 500 reaches 2,000, falls back , Los Angeles Times, Aug 26, 2014, https://search.proquest.com/docview/1555923120?accountid=39704 coded as 0 as it does not discuss the decline or presence of current geopolitical risk factors. (it discuss past geopolitical risks) E.g. Global turmoil fails to unsettle markets , The Daily Telegraph, Aug 25, 2014, https://search.proquest.com/docview/1555592597?accountid=39704 coded as 1 as it discusses the presence of current geopolitical risk.

11. PERSONAL/NONWORK // EXTERNAL How to Code Articles War or Military or Terror Trials Terror trials or war trials are counted as 1 if their account highlights current or recent geopolitical, terrorist or war risks E.g. C.I.A. Head Sees More Spy Cases Ahead , The New York Times, Apr 20, 1994, https://search.proquest.com/docview/429703118?accountid=39704 coded as 0 as it does not discuss whether the trials have geopolitical implications. E.g. For Cambodia, It s Time To Look Ahead--And Back; Elections, Tribunal Stir Up Tensions , Chicago Tribune, Jul 7, 2003, https://search.proquest.com/docview/419924015?accountid=39704 coded as 1 it discusses the geopolitical impact of a series of trials.

12. PERSONAL/NONWORK // EXTERNAL How to Code Articles Meetings or Talks Articles discussing constructive meetings to end wars, to end terrorism should be coded as 0 unless they make explicit references to ongoing tensions or to the risk that this goal will not be achieved. E.g: U.S. To Monitor PLO Pledge to End Terrorism Boston Globe, Dec 19, 1988, http://search.proquest.com/docview/294491173?accountid=39704 coded as 0 because it does not explicitly reference ongoing tensions. E.g: U.S. Presses Mideast Missile Talks Washington Post, Dec 28, 1988, https://search.proquest.com/docview/307076045?accountid=39704 coded as 1 because article discusses tensions surrounding talks.

13. PERSONAL/NONWORK // EXTERNAL How to Code Articles Appointments, Elections and Nominations Appointment or reappointment to a military position or civilian oversight of military position (e.g. Secretary of State) should be counted as 0 unless the article discusses how the appointment brings or ignites new or renewed geopolitical tensions. E.g. Bush's Selections for the United Nations, the C.I.A. and Top Economic Posts , New York Times, Dec 7, 1988, https://search.proquest.com/docview/427021759?accountid=39704 coded as 0 as it does not discuss the geopolitical impact of the appointment. E.g. For Cambodia, It s Time To Look Ahead--And Back; Elections, Tribunal Stir Up Tensions , Chicago Tribune, Jul 7, 2003, https://search.proquest.com/docview/419924015?accountid=39704 coded as 1 it discusses the geopolitical impact of a series of elections.

14. PERSONAL/NONWORK // EXTERNAL Construction of audited indices Based on the audits, we construct the following indices: The GPRA index is the GPR index (G/U) times the fraction of audited articles in set G in each month that are coded as 1 (GPR_AC/50). The GPREA index is expanded GPR index (E/U), times the fraction of audited articles in set E in each month that are coded as 1 (GPRE_AC/50).

15. PERSONAL/NONWORK // EXTERNAL Instructions for Extracting and coding articles Navigate to http://search.proquest.com/newsstand/commandline?accountid=39704 Type in the command line search the search query (see next slide for details)*** Select 50 items per page Save full text of articles in pdf (including index), rename it as YYYY_MM and save Save excel file of the results listing, rename it as YYYY_MM (make sure you ve cleared selection from previous month, otherwise you will save twice as many articles) Report coding results in column G, and any possible comments in H (mark coding results with initials) Save edited excel file as YYYY_MM_FL, where F and L are first and last name

16. PERSONAL/NONWORK // EXTERNAL Instructions for Extracting and coding articles Navigate to http://search.proquest.com/newsstand/commandline?accountid=39704 Type in the command line search the search query (see next slide for details)*** Select 50 items per page Save full text of articles in pdf (including index), rename it as YYYY_MM and save Save excel file of the results listing, rename it as YYYY_MM (make sure you ve cleared selection from previous month, otherwise you will save twice as many articles) Report coding results in column G, and any possible comments in H (mark coding results with initials) Save edited excel file as YYYY_MM_FL, where F and L are first and last name

17. PERSONAL/NONWORK // EXTERNAL Search Query pub.Exact("The Globe and Mail" OR "Chicago Tribune" OR "The Daily Telegraph" OR "Financial Times" OR "The Guardian" OR "Los Angeles Times" OR "New York Times" OR "Wall Street Journal" OR "The Washington Post" OR "USA TODAY") AND ISSN(0319-0714 OR 1085-6706 OR 0307-1235 OR 0307-1766 OR 0261-3077 OR 0362-4331 OR 0458-3035 OR 0099-9660 OR 0190-8286 OR 0734-7456) AND DTYPE(article OR commentary OR editorial OR feature OR front page article OR front page/cover story OR news OR report OR review) AND (((war OR conflict OR hostilities OR revolution* OR insurrection OR uprising OR revolt OR coup OR geopolitical) NEAR/2 (risk* OR warn* OR fear* OR danger* OR threat* OR doubt* OR crisis OR troubl* OR disput* OR concern* OR tension* OR imminen* OR inevitable OR footing OR menace* OR brink OR scare OR peril*)) OR ((peace OR truce OR armistice OR treaty OR parley) NEAR/2 (menace* OR reject* OR threat* OR peril* OR boycott* OR disrupt*)) OR ((military OR troops OR missile* OR "arms" OR weapon* OR bomb* OR warhead*) AND (buildup* OR build-up* OR blockad* OR sanction* OR embargo OR quarantine OR ultimatum OR mobiliz*)) OR ((("nuclear war" OR "nuclear warfare" OR "nuclear warhead" OR "nuclear warheads" OR "nuclear wars") OR ("atomic war" OR "atomic warfare" OR "atomic warheads" OR "atomic wars") OR ("nuclear missile" OR "nuclear missiles") OR ("nuclear bomb" OR "nuclear bombardment" OR "nuclear bomber" OR "nuclear bombers" OR "nuclear bombing" OR "nuclear bombs") OR ("atomic bomb" OR "atomic bombing" OR "atomic bombings" OR "atomic bombs") OR "h-bomb*" OR ("hydrogen bomb" OR "hydrogen bombs") OR "nuclear test" OR ("nuclear weapon" OR "nuclear weaponry" OR "nuclear weapons")) AND (risk* OR warn* OR fear* OR danger* OR threat* OR doubt* OR crisis OR troubl* OR disput* OR concern* OR tension* OR imminen* OR inevitable OR footing OR menace* OR brink OR scare OR peril*)) OR ((terroris* OR guerrilla* OR hostage*) NEAR/2 (risk* OR warn* OR fear* OR danger* OR threat* OR doubt* OR crisis OR troubl* OR disput* OR concern* OR tension* OR imminen* OR inevitable OR footing OR menace* OR brink OR scare OR peril*)) OR ((war OR conflict OR hostilities OR revolution* OR insurrection OR uprising OR revolt OR coup OR geopolitical) NEAR/2 (begin* OR begun OR began OR outbreak OR "broke out" OR breakout OR start* OR declar* OR proclamation OR launch*)) OR ((allie* OR enem* OR foe* OR army OR navy OR aerial OR troops OR rebels OR insurgen*) NEAR/2 (drive* OR shell* OR advance* OR offensive OR invasion OR invad* OR clash* OR attack* OR raid* OR launch* OR strike*)) OR ((terroris* OR guerrilla* OR hostage*) NEAR/2 (act OR attack OR bomb* OR kill* OR strike* OR hijack*)) NOT (movie* OR film* OR museum* OR anniversar* OR obituar* OR memorial* OR arts OR book OR books OR memoir* OR "price war" OR game OR story OR history OR veteran* OR tribute* OR sport OR music OR racing OR cancer OR "real estate" OR mafia OR trial OR tax)) AND PD(2021-2022)