Multinationals, global value chains, and the welfare impacts of economic sanctions

Xiayi Du and Zi Wang

Economics Letters, 2022, vol. 220, issue C

Abstract: We quantify the welfare impacts of the recent economic sanctions against Russia using a multi-country multi-sector general equilibrium model with trade, multinational production (MP), and input–output linkages. We calibrate our model to the world with 44 economies and 34 sectors prior to the Russia–Ukraine war in 2022. Our counterfactual analysis suggests that the economic sanctions that cut trade and MP linkages between Russia and all other economies except China would decrease the real income in Russia by 11.98%. Moreover, if only trade linkages are cut, the real income in Russia would decrease by 9.55%.

Keywords: Multinational firms; Global value chains; Economic sanctions (search for similar items in EconPapers)
JEL-codes: F12 F23 F51 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:220:y:2022:i:c:s0165176522003445

DOI: 10.1016/j.econlet.2022.110870

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