The Impact of Economic Sanctions on Russia and its Six Greatest European Trade Partners
Morad Bali
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Abstract:
The Ukrainian crisis of November 2013 has led to the proclamation of independence of the Republic of Crimea in March 2014, and its attachment to Russia. This attachment, recognised by Russia and contested by a large number of Western countries, triggered an international crisis between the Russian Federation and the West (European Union, United States of America, et cetera). As a means of applying pressure on Russia, Western countries decided to launch a set of international sanctions. This paper's goal is to assess on sanctions effects on Russian and European economies. Thus, a country structural vector autoregressive (CSVAR) model is used in order to witness the impact of a sanction shock on considered economies. To our best knowledge, this paper is the first to use a CSVAR model to study the economic growth effects of anti-Russian sanctions on the considered economies. The economic conflict repercussions are revealed on the Euro Area (19 countries), on the six biggest trade partners of Russia as a lone entity, and finally on the six biggest trade partners of Russia separately. Results witness that the shock's effects are quite different whether a sum of GDP is used or not. In addition, results reveal that Russia is the most impacted by sanctions with a quarter-on-quarter GDP growth decrease of 3.25% after 3 quarters. Yet, European economies are also negatively impacted by sanctions, even if the impact is much weaker: -0.075% for Finland, -0.025% for France, -0.0125% for Germany, -0.012% for Italy, and -0.063% for Poland. As a consequence, we can say that the own coercive measures of European countries have a negative impact on their economies.
Keywords: Vector autoregressive models; International crisis; Russian economy; European economies; Economic sanctions; Economie russe; Sanctions économiques; Economies européennes; Crise internationale; Crise ukrainienne (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-cis, nep-eec and nep-tra
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01918521v1
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Published in ФИНАНСЫ И БИЗНЕС , 2018, Finance & Business, 14 (2), pp.45-67. ⟨10.31085/1814-4802-2018-14-2-45-67⟩
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01918521
DOI: 10.31085/1814-4802-2018-14-2-45-67
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