Modelling the Impact of a Rise in Global Equity Risk Premium: The G-Cubed Simulation

The global disruptions—the Covid-19 pandemic, financial crisis, trade tension, and geopolitical issues—led to uncertainty across the world economies. impact either on individual emerging or advanced countries, however, remains unclear. To this end, study is simulating a shock of one percent increase in equity risk premium permanently all sectors focusing exploring its United States (US), Kingdom (UK), Australia, China, Indonesia, India. results reveal that no countries are immune from short-lived synchronised nuisance. Investment plummeted massively following profound drop interest rate, while unemployment suddenly soars, Gross Domestic Product (GDP) contracted dramatically. In long run, economies reverse converge initial condition. Nevertheless, there would be persistent GDP loss sluggish investment Therefore, policy responses should designed based strong international cooperation, fiscal limit losing confidence.