GPR — Geopolitical Risk Index
GPR
What it is
Quantitative index developed by Caldara and Iacoviello (Federal Reserve Board) based on the frequency of articles in 10 major international newspapers mentioning geopolitical risks (wars, attacks, diplomatic tensions). Calibrated to a base of 100.
How to read it
GPR < 100 = calm environment. 100-200 = latent tensions. 200-300 = active stress. > 300 = major shock (9/11 2001, Iraq invasion 2003, Russia-Ukraine 2022). A GPR spike typically precedes equity decline and a rise in safe havens (gold, USD, energy).
Common reference points
- Geopolitical calm< 100
- Latent tensions100 – 200
- Active risk200 – 300
- Major crisis> 300
Orders of magnitude, not a rule: the same number does not mean the same thing from one sector to the next.
What it does not tell you
The index is BACKWARD-LOOKING — it rises after the event, not before. It over-weights West vs Rest tensions (Anglo newspaper bias). And it doesn't distinguish a regional event from a major war.
Educational content. Polaris is not a registered investment adviser and makes no recommendation.