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The War in Europe: Economic Costs of the Ukrainian Conflict

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  • Julia Bluszcz
  • Marica Valente

Abstract

With more than ten thousand casualties, the 2014 Ukrainian war between pro-Russian separatists and the government in the Donbass region, Ukraine's productive core, has taken a severe toll on the country. Using cross-country panel data over the period 1995-2017, this paper quantifies the short-term causal effects of the Donbass war on Ukraine's GDP. Results from the counterfactual estimation by the synthetic control method show that Ukraine's per capita GDP foregone due to the war amounts to 15.1% on average for 2013-2017. Separate analysis for the affected provinces of Donetsk and Luhansk indicate an average causal effect of 43% for 2013-2016. Confoundedness checks obtained by iteratively estimating synthetic controls on the pre-war period to account for previous Ukrainian-Russian disputes show robustness of the results.

Suggested Citation

  • Julia Bluszcz & Marica Valente, 2019. "The War in Europe: Economic Costs of the Ukrainian Conflict," Discussion Papers of DIW Berlin 1804, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp1804
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    References listed on IDEAS

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    Cited by:

    1. Artem Kochnev, 2021. "Marching to Good Laws: The Impact of War, Politics, and International Credit on Reforms in Ukraine," wiiw Working Papers 192, The Vienna Institute for International Economic Studies, wiiw.
    2. Nawar Al-Saadi, 2023. "Russian-Ukrainian War's Effects on the World Economy," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 77-94.

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    More about this item

    Keywords

    Conflict; economic costs; Donbass; synthetic control;
    All these keywords.

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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