Crimea and punishment: the impact of sanctions on Russian and European economies

Konstantin Kholodilin (renoloco@yandex.ru) and Aleksei Netšunajev

No wp2017-5, Bank of Estonia Working Papers from Bank of Estonia

Abstract: The conflict between Russia and Ukraine that started in March 2014 led to bilateral economic sanctions being imposed on each other by Russia and Western countries, including the members of the euro area. The paper investigates the impact of the sanctions on the real side of the economies of Russia and the euro area. The effects of sanctions are analysed with a structural vector autoregression. To pin down the effect we are interested in, we include in the model an index that measures the intensity of the sanctions. The sanction shock is identified and separated from the oil price shock by narrative sign restrictions. We find a very high probability that Russian GDP declined as a result of the sanctions. In contrast to that, the effects of the sanctions on the euro area are limited to real effective exchange rate adjustments

Keywords: political conflict; sanctions; economic growth; Russia; euro area; structural vector autoregression (search for similar items in EconPapers)
JEL-codes: C32 F51 (search for similar items in EconPapers)
Date: 2017-09-11, Revised 2017-09-11
New Economics Papers: this item is included in nep-cis, nep-eec and nep-tra
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http://dx.doi.org/10.23656/25045520/52017/0143 (application/pdf)

Related works:
Working Paper: Crimea and Punishment: The Impact of Sanctions on Russian and European Economies (2016)
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