Welfare implications of trade sanctions against Russia

Evgenii Monastyrenko () and Pierre Picard
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Evgenii Monastyrenko: DEM, Université du Luxembourg

DEM Discussion Paper Series from Department of Economics at the University of Luxembourg

Abstract: Since the beginning of the war between Russia and Ukraine in 2022, Western countries have been discussing and then implementing new trade sanctions against Russian fossil fuels. This paper quantifies such policies’ trade and welfare effects using a general equilibrium model with 92 countries and 65 intermediate products and sectoral linkages. The paper breaks down the effects of the bans on gas, crude and refined oil, and coal, and discusses the impact of alternative coalitions of sanctioning countries. In the most stringent case, the model predicts welfare losses of about 16.8% in Russia and 0.42% in the sanctioning countries. These losses are very heterogeneous across sanctioning countries. The OECD countries have an important role as their participation in sanction policies significantly influences expected outcomes in Russia. Meanwhile, should only EU countries implement fossil fuel sanctions, their welfare losses are predicted to be 3.3% on average

Keywords: trade shocks; sanctions; welfare outcomes. (search for similar items in EconPapers)
JEL-codes: F13 F14 F17 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cis, nep-ene, nep-int and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:luc:wpaper:23-19

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