IDEAS home Printed from https://ideas.repec.org/a/bic/journl/v19y2019i1p39-51.html
   My bibliography  Save this article

Crimea and punishment: the impact of sanctions on Russian economy and economies of the euro area

Author

Listed:
  • Konstantin A. Kholodilin

    (DIW Berlin, Berlin, Germany and Higher School of Economics, National Research University, St. Petersburg, Russia)

  • Aleksei Netsunajev

    (Elisa Eesti AS and Tallinn University of Technology, Tallinn, Estonia)

Abstract

The conflict between Russia and Ukraine that started in March 2014 led Western countries and Russia to impose economic sanctions on each other, including the euro zone members. 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 analyzed with a structural vector autoregression. To pin down the effect we are interested in, we include an index that measures the intensity of the sanctions in the model. The sanction shock is identified and separated from the oil price shock by narrative sign restrictions. We find weak evidence that Russian and euro area GDPs declined as a result of the sanctions. The effects of the sanctions are also small for the real effective exchange rate.

Suggested Citation

  • Konstantin A. Kholodilin & Aleksei Netsunajev, 2019. "Crimea and punishment: the impact of sanctions on Russian economy and economies of the euro area," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 19(1), pages 39-51.
    • Handle: RePEc:bic:journl:v:19:y:2019:i:1:p:39-51
    DOI: 10.1080/1406099X.2018.1547566
    as

    Download full text from publisher

    File URL: https://doi.org/10.1080/1406099X.2018.1547566
    Download Restriction: no
    File URL: https://libkey.io/10.1080/1406099X.2018.1547566?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Blanchard, Olivier Jean & Quah, Danny, 1989. "The Dynamic Effects of Aggregate Demand and Supply Disturbances," American Economic Review, American Economic Association, vol. 79(4), pages 655-673, September.
    2. Karel Mertens & MortenO. Ravn, 2010. "Measuring the Impact of Fiscal Policy in the Face of Anticipation: A Structural VAR Approach," Economic Journal, Royal Economic Society, vol. 120(544), pages 393-413, May.
    3. Bernanke, Ben S & Blinder, Alan S, 1992. "The Federal Funds Rate and the Channels of Monetary Transmission," American Economic Review, American Economic Association, vol. 82(4), pages 901-921, September.
    4. Caruso Raul, 2003. "The Impact of International Economic Sanctions on Trade: An Empirical Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 9(2), pages 1-36, April.
    5. Juan Antolín-Díaz & Juan F. Rubio-Ramírez, 2018. "Narrative Sign Restrictions for SVARs," American Economic Review, American Economic Association, vol. 108(10), pages 2802-2829, October.
    6. Sims, Christopher A., 1992. "Interpreting the macroeconomic time series facts : The effects of monetary policy," European Economic Review, Elsevier, vol. 36(5), pages 975-1000, June.
    7. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    8. Manuel Hoffmann & Matthias Neuenkirch, 2017. "The pro-Russian conflict and its impact on stock returns in Russia and the Ukraine," International Economics and Economic Policy, Springer, vol. 14(1), pages 61-73, January.
    9. M. Hakan Berument & Nildag Basak Ceylan & Nukhet Dogan, 2010. "The Impact of Oil Price Shocks on the Economic Growth of Selected MENA1 Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 1), pages 149-176.
    10. Canova, Fabio & Nicolo, Gianni De, 2002. "Monetary disturbances matter for business fluctuations in the G-7," Journal of Monetary Economics, Elsevier, vol. 49(6), pages 1131-1159, September.
    11. Dreger, Christian & Kholodilin, Konstantin A. & Ulbricht, Dirk & Fidrmuc, Jarko, 2016. "Between the hammer and the anvil: The impact of economic sanctions and oil prices on Russia’s ruble," Journal of Comparative Economics, Elsevier, vol. 44(2), pages 295-308.
    12. repec:wsr:wpaper:y:2015:i:138 is not listed on IDEAS
    13. Kaspar Oja, 2015. "No milk for the bear: the impact on the Baltic states of Russia's counter-sanctions," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 15(1), pages 38-49.
    14. Neuenkirch, Matthias & Neumeier, Florian, 2015. "The impact of UN and US economic sanctions on GDP growth," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 110-125.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bali, Morad & Rapelanoro, Nady, 2021. "How to simulate international economic sanctions: A multipurpose index modelling illustrated with EU sanctions against Russia," International Economics, Elsevier, vol. 168(C), pages 25-39.
    2. repec:zbw:bofitp:2019_024 is not listed on IDEAS
    3. Korhonen, I., 2019. "Sanctions and Counter-Sanctions - What Are their Economic Effects in Russia and Elsewhere?," Journal of the New Economic Association, New Economic Association, vol. 43(3), pages 184-190.
    4. Pavel Dovbnya, 2020. "Announcements of Sanctions and the Russian Equity Market: An Event Study Approach," Russian Journal of Money and Finance, Bank of Russia, vol. 79(1), pages 74-92, March.
    5. Prilepskiy, I., 2019. "Financial Sanctions: Impact on Capital flows and GDP Growth in Russia," Journal of the New Economic Association, New Economic Association, vol. 43(3), pages 163-172.
    6. Morad Bali & Thanh T. Nguyen & Lincoln F. Pratson, 2024. "Impacts of EU Sanctions Levied in 2014 on Individual European Countries' Exports to Russia: Winners and Losers," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 50(2), pages 154-194, April.
    7. Shakib, Mohammed & Sohag, Kazi & Hassan, M. Kabir & Vasilyeva, Rogneda, 2023. "Finance and export diversifications Nexus in Russian regions: Role of trade globalization and regional potential," Emerging Markets Review, Elsevier, vol. 57(C).
    8. Mikhail Mamonov & Anna Pestova, 2021. ""Sorry, You're Blocked." Economic Effects of Financial Sanctions on the Russian Economy," CERGE-EI Working Papers wp704, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    9. Iikka Korhonen, 2020. "Economic Sanctions on Russia and Their Effects," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(04), pages 19-22, January.
    10. Jakub Horak, 2021. "Sanctions as a Catalyst for Russia’s and China’s Balance of Trade: Business Opportunity," JRFM, MDPI, vol. 14(1), pages 1-26, January.
    11. Simola, Heli, 2023. "What the literature says about the effects of sanctions on Russia," BOFIT Policy Briefs 8/2023, Bank of Finland Institute for Emerging Economies (BOFIT).
    12. Morad Bali, 2020. "Methodological Limitations of the Literature in the Study of Economic Sanctions, the Ukrainian Crisis Case," Post-Print hal-02472943, HAL.
    13. Sziklai, Balázs R. & Kóczy, László Á. & Csercsik, Dávid, 2020. "The impact of Nord Stream 2 on the European gas market bargaining positions," Energy Policy, Elsevier, vol. 144(C).
    14. Anna Miromanova, 2023. "The effectiveness of embargoes: Evidence from Russia," The World Economy, Wiley Blackwell, vol. 46(4), pages 906-940, April.
    15. Gutmann, Jerg & Neuenkirch, Matthias & Neumeier, Florian, 2023. "The economic effects of international sanctions: An event study," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1214-1231.
    16. Bijoy Chandra Das & Fakhrul Hasan & Soma Rani Sutradhar & Sujana Shafique, 2023. "Ukraine–Russia Conflict and Stock Markets Reactions in Europe," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 24(3), pages 395-407, September.
    17. Barseghyan, Gayane, 2019. "Sanctions and counter-sanctions : What did they do?," BOFIT Discussion Papers 24/2019, Bank of Finland, Institute for Economies in Transition.
    18. Nguyen, Trung Thanh & Do, Manh Hung, 2021. "Impact of economic sanctions and counter-sanctions on the Russian Federation’s trade," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 267-278.
    19. Mirzosaid Sultonov, 2020. "The Impact of International Sanctions on Russian Financial Markets," Economies, MDPI, vol. 8(4), pages 1-14, December.
    20. Mohammed Shakib, 2023. "Innovation-Export Diversification Nexus in Russian Regions: Does Trade Globalization, Business Potential and Geopolitics Matter?," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 22(4), pages 932-974.
    21. Anna Miromanova, 2023. "Quantifying the trade‐reducing effect of embargoes: Firm‐level evidence from Russia," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(3), pages 1121-1160, August.
    22. Mikhail Mamonov & Anna Pestova, 2023. "The Price of War: Macroeconomic and Cross-Sectional Effects of Sanctions on Russia," CERGE-EI Working Papers wp756, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    23. Mirzosaid Sultonov, 2022. "Regional Economic and Financial Interconnectedness and the Impact of Sanctions: The Case of the Commonwealth of Independent States," JRFM, MDPI, vol. 15(12), pages 1-18, November.
    24. Charemza, Wojciech & Makarova, Svetlana & Rybiński, Krzysztof, 2022. "Economic uncertainty and natural language processing; The case of Russia," Economic Analysis and Policy, Elsevier, vol. 73(C), pages 546-562.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Konstantin A. Kholodilin & Aleksei Netsunajev, 2016. "Crimea and Punishment: The Impact of Sanctions on Russian and European Economies," Discussion Papers of DIW Berlin 1569, DIW Berlin, German Institute for Economic Research.
    2. Gert Peersman, 2005. "What caused the early millennium slowdown? Evidence based on vector autoregressions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(2), pages 185-207.
    3. Marek Rusnak & Tomas Havranek & Roman Horvath, 2013. "How to Solve the Price Puzzle? A Meta-Analysis," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 45(1), pages 37-70, February.
    4. Uhlig, Harald, 2005. "What are the effects of monetary policy on output? Results from an agnostic identification procedure," Journal of Monetary Economics, Elsevier, vol. 52(2), pages 381-419, March.
    5. Ramey, V.A., 2016. "Macroeconomic Shocks and Their Propagation," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 71-162, Elsevier.
    6. Mansur, Alfan, 2015. "Identifying Shocks on the Economic Fluctuations in Indonesia and US: The Role of Oil Price Shocks in a Structural Vector Autoregression Model," MPRA Paper 94018, University Library of Munich, Germany, revised 09 Jun 2015.
    7. Herwartz, Helmut & Rohloff, Hannes & Wang, Shu, 2020. "Proxy SVAR identification of monetary policy shocks: MonteCarlo evidence and insights for the US," University of Göttingen Working Papers in Economics 404, University of Goettingen, Department of Economics.
    8. Rafiq, M.S. & Mallick, S.K., 2008. "The effect of monetary policy on output in EMU3: A sign restriction approach," Journal of Macroeconomics, Elsevier, vol. 30(4), pages 1756-1791, December.
    9. Evans, Charles L. & Marshall, David A., 2007. "Economic determinants of the nominal treasury yield curve," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1986-2003, October.
    10. Carlo A. Favero, 2007. "Model Evaluation in Macroeconometrics: from early empirical macroeconomic models to DSGE models," Working Papers 327, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    11. Herwartz, Helmut & Lange, Alexander & Maxand, Simone, 2019. "Statistical identification in SVARs - Monte Carlo experiments and a comparative assessment of the role of economic uncertainties for the US business cycle," University of Göttingen Working Papers in Economics 375, University of Goettingen, Department of Economics.
    12. Pham The Anh, 2007. "Nominal Rigidities and The Real Effects of Monetary Policy in a Structural VAR Model," Working Papers 06, Development and Policies Research Center (DEPOCEN), Vietnam.
    13. Vargas-Silva, Carlos, 2008. "Monetary policy and the US housing market: A VAR analysis imposing sign restrictions," Journal of Macroeconomics, Elsevier, vol. 30(3), pages 977-990, September.
    14. Evans, Charles L. & Marshall, David A., 1998. "Monetary policy and the term structure of nominal interest rates: Evidence and theory," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 49(1), pages 53-111, December.
    15. Masagus M. Ridhwan & Henri L.F. de Groot & Peter Nijkamp, 2010. "The Impact of Monetary Policy on Economic Activity - Evidence from a Meta-Analysis," Tinbergen Institute Discussion Papers 10-043/3, Tinbergen Institute.
    16. Jean Louis, Rosmy & Brown, Ryan & Balli, Faruk, 2011. "On the feasibility of monetary union: Does it make sense to look for shocks symmetry across countries when none of the countries constitutes an optimum currency area?," Economic Modelling, Elsevier, vol. 28(6), pages 2701-2718.
    17. Drautzburg, Thorsten & Wright, Jonathan H., 2023. "Refining set-identification in VARs through independence," Journal of Econometrics, Elsevier, vol. 235(2), pages 1827-1847.
    18. Oscar Díaz Q. & Marco Laguna V., 2007. "Factores que explican la reducción de las tasas pasivas de interés en el sistema bancario boliviano," Monetaria, CEMLA, vol. 0(4), pages 331-366, octubre-d.
    19. Mustafa Caglayan & Kostas Mouratidis & Elham Saeidinezhad, 2011. "Monetary policy effects on output and exchange rates: Results from US, UK and Japan," Working Papers 2011016, The University of Sheffield, Department of Economics.
    20. Serhan Cevik & Katerina Teksoz, 2013. "Lost In Transmission? The Effectiveness Of Monetary Policy Transmission Channels In The Gcc Countries," Middle East Development Journal (MEDJ), World Scientific Publishing Co. Pte. Ltd., vol. 5(03), pages 1-21.

    More about this item

    Keywords

    Political conflict; sanctions; economic growth; Russia; euro area; structural vector autoregression;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bic:journl:v:19:y:2019:i:1:p:39-51. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Anna Zasova (email available below). General contact details of provider: https://edirc.repec.org/data/biceplv.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.