Quantitative assessment of the economic impact of the trade disruptions following the Russian invasion of Ukraine

Alessandro Borin (), Francesco Conteduca, Enrica Di Stefano (), Vanessa Gunnella (), Michele Mancini and Ludovic Panon
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Alessandro Borin: Bank of Italy
Enrica Di Stefano: Bank of Italy

No 700, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We provide a quantification of the impact through international trade of the restrictive measures and related trade disruptions following the Russian invasion of Ukraine. We first exploit the multi-sector, multi-country, general equilibrium trade model by Antràs and Chor (2018). In this framework, Russia would suffer greatly from trade disruptions. Adding restrictive measures on energy exports would further amplify this loss. For sanctioning countries, the welfare impact is modest. This result arises mainly because the used model allows for a high degree of substitutability across inputs and countries, a feature arguably unrealistic especially in the short-run. When we relax this assumption by relying on the framework proposed by Bachmann et al. (2022) extended to a multi-country setting, we show that the impact on sanctioning countries might increase markedly in the short run and would be very sensitive to small changes in countries’ possibility to diversify away from Russian energy.

Keywords: war; trade disruptions; energy shock; international trade; global value chains (search for similar items in EconPapers)
JEL-codes: F15 F17 F51 Q43 (search for similar items in EconPapers)
Date: 2022-06
New Economics Papers: this item is included in nep-cis, nep-ene, nep-int and nep-tra
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Citations: View citations in EconPapers (13)

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