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International Economic Sanctions: Multipurpose Index Modelling in the Ukrainian Crisis Case

Nady Rapelanoro and Morad Bali

No 2020-8, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: This short paper’s goal is to create a sanction index to simulate international economic sanctions. To do so, it has been decided to focus on the Ukrainian crisis case, and on international sanctions against the Russian Federation. The first part of this paper treats the methodology and mathematical formalization used to build our index. After the mathematical formalization comes an empirical part that is demonstrating improvements brought by our work. To assess these improvements, our index is compared to a previously developed index from Kholodilin and Netšunajev (2016). Four country SVAR models are used in two main sections, two initials and two extended. Results of this section reveal that our new sanction index has a stronger explanatory power. In addition, it seems that our index affects short-term Russian production variations more sharply than its predecessor. The explanatory power improvements are confirmed by extended models, confirming our index relevance.

Keywords: Russian economy; European economies; Ukrainian crisis; economic sanctions; sanctions shock; trade relations; international crisis; structural vector autoregressive models (search for similar items in EconPapers)
JEL-codes: C5 F4 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2020
New Economics Papers: this item is included in nep-cis, nep-int and nep-tra
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