Agent based modeling of resilience of key economies to sanctions pressure

A. Mashkova and A. Bakhtizin
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A. Mashkova: Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russia
A. Bakhtizin: Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russia

Journal of the New Economic Association, 2025, vol. 67, issue 2, 12-24

Abstract: Introduction of sanctions against Russia by Western countries makes an urgent task to assess prospects of the global economy and international trade taking into account possibility of incomplete substitution of resources. To solve this problem, an agentbased approach was chosen. The computer model of trade wars based on it reflects dynamics of international commodity flows between Russia, the USA, the EU countries, China and the rest of the world taking into account trade restrictions, exchange rates, inflation and final demand. The purpose of calculations was to assess sensitivity of economic systems of various countries to restructuring trade relations. Calculations included parameter of resource substitution in the range from 0 to 1, where 1 corresponds to the possibility of complete resource substitution (baseline scenario). Three levels of substitution were selected for the experiments on the model: 1; 0.9 and 0.8. Results showed that sensitivity of Russian economy to the degree of resource substitution is relatively low: deviation of GDP in the first year of sanctions to the baseline scenario does not exceed 1.7%. Economy of the EU countries suffer most from the imposed sanctions, and its sensitivity to the level of resource substitution is the greatest. Comparison of the obtained forecasts with retrospective data for 2022-2023 showed that for most countries involved in the trade confrontation, resource substitution was full, and only in Russia and the EU did substitution drop to 90-95% at some points.

Keywords: agent-based model; trade wars; trade restrictions; import; export; input-output balance (search for similar items in EconPapers)
JEL-codes: F47 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:nea:journl:y:2025:i:67:p:12-24

DOI: 10.31737/22212264_2025_2_12-24

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