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The spillover effects of rising energy prices following 2022 Russian invasion of Ukraine

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  • Yagi, Michiyuki
  • Managi, Shunsuke

Abstract

This study examines how the rise in energy prices following the Russian invasion of Ukraine (which began on February 24, 2022) has spread to other sectors using the monthly input–output model (56 sectors in 44 countries). The estimated results demonstrate that if prices increase by 20% exclusively in Russia’s mining and quarrying (M&Q) sector, there will be almost no global effect. However, if prices increase by 20% in every M&Q sector around the world, global prices (the weighted average across all sectors) will rise by 3.15%, damaging 6.83% of monthly GDP at the pre-invasion level as a surplus loss ($551,080 million per month). Because oil prices rose for almost five months from February 28 to August 3, 2022, the world suffered five times this damage, or 2.85% of annual GDP ($2.7 trillion). This scenario is roughly equivalent to a price change of 5 times in the Russian M&Q sector alone.

Suggested Citation

  • Yagi, Michiyuki & Managi, Shunsuke, 2023. "The spillover effects of rising energy prices following 2022 Russian invasion of Ukraine," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 680-695.
    • Handle: RePEc:eee:ecanpo:v:77:y:2023:i:c:p:680-695
    DOI: 10.1016/j.eap.2022.12.025
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    More about this item

    Keywords

    2022 Russian invasion of Ukraine; Energy prices; Inflation; Input–output analysis; Leontief price model; Spillover effects;
    All these keywords.

    JEL classification:

    • D57 - Microeconomics - - General Equilibrium and Disequilibrium - - - Input-Output Tables and Analysis
    • N70 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - General, International, or Comparative
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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