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Crimea and Punishment: The Impact of Sanctions on Russian and European Economies

Author

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  • Konstantin A. Kholodilin
  • Aleksei Netsunajev

Abstract

The conflict between Russia and Ukraine that started in March 2014 resulted in bilateral economic sanctions imposed by Russia and Western countries, including the members of the euro area (EA). The paper investigates the impact of sanctions on the real side of the economy of Russia and the EA. Using an index that measures intensity of sanctions the effects of sanctions shocks are analyzed by the means of structural vector autoregression. The direct effect on GDP growth is documented for Russia but not for the EA. While, on average, 1.97% of the GDP quarter-on-quarter growth is estimated to be lost due to sanctions by Russia, the corresponding estimate for the aggregate EA is very small. On the contrary, the indirect effect through depreciation of the currency is shown to be more important for the EA.

Suggested Citation

  • 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.
    • Handle: RePEc:diw:diwwpp:dp1569
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    Cited by:

    1. Ankudinov, Andrei & Ibragimov, Rustam & Lebedev, Oleg, 2017. "Sanctions and the Russian stock market," Research in International Business and Finance, Elsevier, vol. 40(C), pages 150-162.
    2. Shida, Yoshisada, 2019. "Russian Business under Economic Sanctions: Is There Regional Heterogeneity?," MPRA Paper 93817, University Library of Munich, Germany.
    3. Jan Wedemeier & Lukas Wolf, 2022. "Navigating Rough Waters: Global Shipping and Challenges for the North Range Ports," Intereconomics: Review of European Economic Policy, Springer;ZBW - Leibniz Information Centre for Economics;Centre for European Policy Studies (CEPS), vol. 57(3), pages 192-198, May.
    4. 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.
    5. Nady Rapelanoro & BALI Morad, 2020. "International Economic Sanctions: Multipurpose Index Modelling in the Ukrainian Crisis Case," EconomiX Working Papers 2020-8, University of Paris Nanterre, EconomiX.
    6. Pestova, Anna & Mamonov, Mikhail, 2019. "Should we care? : The economic effects of financial sanctions on the Russian economy," BOFIT Discussion Papers 13/2019, Bank of Finland, Institute for Economies in Transition.
    7. Pestova, Anna & Mamonov, Mikhail, 2019. "Should we care? The economic effects of financial sanctions on the Russian economy," BOFIT Discussion Papers 13/2019, Bank of Finland Institute for Emerging Economies (BOFIT).
    8. Bayramov, Vugar & Rustamli, Nabi & Abbas, Gulnara, 2020. "Collateral damage: The Western sanctions on Russia and the evaluation of implications for Russia’s post-communist neighbourhood," International Economics, Elsevier, vol. 162(C), pages 92-109.
    9. Morad Bali, 2020. "Methodological Limitations of the Literature in the Study of Economic Sanctions, the Ukrainian Crisis Case," Post-Print hal-02472943, HAL.
    10. Massimiliano Di Pace, 2017. "Eu and Usa sanctions and their impact on Russia: a logical-qualitative assessment," Argomenti, University of Urbino Carlo Bo, Department of Economics, Society & Politics, vol. 7(7), pages 1-16, May-Augus.
    11. Morad Bali, 2018. "The Impact of Economic Sanctions on Russia and its Six Greatest European Trade Partners," Post-Print halshs-01918521, HAL.
    12. 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.
    13. repec:zbw:bofitp:2019_013 is not listed on IDEAS
    14. Shida, Yoshisada, 2019. "Russian Business under Economic Sanctions: Is There Regional Heterogeneity?," MPRA Paper 93817, University Library of Munich, Germany.

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    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

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