Alexandra Avdeenko, Maximilian Kaiser, Krisztina Kis-Katos, 19 May 2022

Whether economic sanctions against Russia have real effects has been increasingly called into question. This column suggests that changes in e-commerce can demonstrate whether and how the 2022 Western sanctions contributed to de-linking Russia from the West. An analysis of trends in cross-border international online retail based on digitally recorded daily transactions data from 2,288 international and Russian companies shows substantial declines in Russia’s e-commerce transactions. About five weeks after the war started, revenues from e-commerce imports to Russia had fallen by half, with no signs of compensation by Russian retailers in the sample studied.

Oleg Itskhoki, Dmitry Mukhin, 16 May 2022

Despite an increasing number of sanctions imposed on the Russian economy since its invasion of Ukraine in February 2022, the ruble has appreciated back to its pre-war level. This column argues that the prevalence of import over export sanctions and the financial repression imposed in Russia, which lowered the local demand for foreign currency, have driven the appreciation. Despite the opposite effects on the exchange rate, the sanctions on imports and exports are equivalent in terms of their impact on consumption, welfare, and government fiscal losses. Nonetheless, the level of the exchange rate remains relevant for imports, savings, and monetary policy.

Michael Dooley, Peter Garber, David Folkerts-Landau, 12 May 2022

Recent sanctions imposed by the US on Russia have called into question the US dollar’s dominant role as a reserve currency. This column argues that sanctions will, in fact, reinforce the dollar’s dominance rather than weakening it. It emphasises the importance of ‘collateral’ demand for reserves, especially by developing countries. Countries which choose to exit the dollar bloc will have restricted ability to reassure foreign investors, which could impact a growth strategy that involves participation of centre country capital.

Kornel Mahlstein, Christine McDaniel, Simon Schropp, Marinos Tsigas, 06 May 2022

As relations between the West and Russia deteriorate, the imposition of a complete trade embargo by Allies on Russia appears increasingly likely. Using computable general equilibrium modelling, this column explores the short- to medium-term economic effects of such an Allied trade embargo. It finds that Russia would likely sustain sizable losses of upwards of 14% of real GDP. Allied economies are unevenly affected by the sanctions, with real GDP losses between 0.1% and 1.6%. Finally, if Russia were to impose countersanctions, rather than being a sanction target, losses to the Russian economy would be even greater.

Sandeep Baliga, 02 May 2022

The Russian invasion of Ukraine has been met with coordinated sanctions. Sanctions are designed to incentivise cooperation, but this column argues that those being used in practice are scattershot. Instead, sanctions on oil and gas exports are the most effective way to maximise the probability that Russia ceases its misguided attack on Ukraine. Such sanctions are most likely to target the elite who are closest to President Putin. Also, it is important that cooperation is defined clearly and to not go as far as regime change in Russia.

Tilman Eichstädt, 26 April 2022

With the Donbas and towns in other regions of Ukraine rattled by the second phase of the Ukraine war, Germany and the rest of Europe are still struggling to find an effective response to the Russian aggression. This column uses negotiation analysis and non-cooperative game theory to argue that import taxes or tariffs can be a very effective way to influence the duration of the conflict. Implementing these in a clear step-by-step approach would increase the time pressure on Russia to end the war and raise the credibility of further actions.

François Langot, Franck Malherbet, Riccardo Norbiato, Fabien Tripier, 22 April 2022

Following the invasion of Ukraine, the EU and the international community imposed financial sanctions and trade restrictions on Russia. This column analyses the costs for Russia and the EU of further trade restrictions with varying intensity. It shows that an embargo only by the EU would cost Russia three times as much as it would cost the EU. However, if an embargo were imposed by the EU and other countries ‘unfriendly’ to Russia, the relative cost would be 13 times higher for Russia. The adage that there is strength in unity has never been more relevant.

Anette Hosoi, Simon Johnson, 20 April 2022

The Russian war on Ukraine is financed in large part by the export of oil, and while countries have intensified various sanctions on Putin’s leadership group and the Russian economy, Russian oil export revenues since the invasion on 24 February have risen. A new CEPR Policy Insight argues that if the objective is to reduce Western financing of the Russian military effort, the only logical next step is for the US, the EU, the UK, and others to prohibit all Russian oil and oil product exports, and to make it illegal to carry such cargo in European-owned tankers.

Anna Pestova, Mikhail Mamonov, Steven Ongena, 15 April 2022

Following Russia’s invasion of Ukraine on 24 February 2022, the US, Europe, and many other countries imposed new economic sanctions on Russia. This column assesses the economic effects of these sanctions using a structural vector auto-regression model of the Russian economy. The findings suggest that industrial production, consumption, and investment will all decline, and that Russian GDP will contract by -12.5% to -16.5% in 2022. Nevertheless, the Russian economy will continue to rely on its existing export model, which may be difficult to undermine, even with potential oil and gas embargoes. 

Sumru Altuğ, Sevcan Yesiltas, 13 April 2022

The 2014 Ukraine crisis resulted in sanctions being imposed on the Russian economy. This column analyses the economic uncertainty these sanctions generated and the impact on investment by Russian non-financial firms. It shows that investment in the non-financial sector declined after the sanctions were imposed. Sectoral variation in foreign exchange debt exposure, oil cost dependence, and exposure of inputs to indirect sanctions are all important mechanisms through which the heightened uncertainty operated. This has important implications for the Russian economy, which is facing severe sanctions as a result of the current war with Ukraine.

Alexander Mihailov, 29 March 2022

In response to sanctions imposed on Russia following the invasion of Ukraine, President Putin recently announced that ‘unfriendly’ countries would have to pay for Russian gas (and perhaps oil in the future) in roubles. This column discusses the possible reasons for the announcement and the potential economic and financial implications if Putin were to follow through on it. 

Eddy Bekkers, Carlos Góes, 29 March 2022

The war in Ukraine and the sanctions imposed on Russia have intensified the debate on the economic repercussions of a shift in global trade policy focus from mutual economic benefits of open trade policies to geopolitical considerations limiting interdependence. This column finds that a potential decoupling of the global trading system into two blocs – a US-centric and a China-centric bloc – would reduce global welfare in 2040 compared to a baseline by about 5%. Losses would be largest (more than 10%) in low-income regions that benefit most from positive technology spillovers from trade.

Peter A.G. van Bergeijk, 28 March 2022

The sanctions against Russian have been described as “unprecedented”. This column argues that this is not the case, and neither is the current sanctions packet sufficient to realistically expect that they will work, as sanctions against military adventures have a significantly lower probability of success. The weak 2014 sanctions against Russia’s annexation of the Crimea reduced the credibility of broad-based EU sanctions and or the threat of scaling up targeted sanctions. The West could do better by including an embargo on capital goods and a boycott of Russian energy.

Mark Harrison, 25 March 2022

Economic warfare, including blockades of essential goods and bombings of industry, was widely used in WWII but with limited impact. This column explores Mançur Olson’s explanation, which is underpinned by the elementary economic concept of substitution. Olson argued that there are no essential goods; there are only essential uses, which can generally be supplied in many ways. This has sweeping implications for the use of economic sanctions, which can be applied to the present context of Russia’s aggression against Ukraine.

Richard Berner, Stephen Cecchetti, Kim Schoenholtz, 21 March 2022

The sanctions on Russia in response to its invasion of Ukraine are the most powerful and costly punishments imposed on a major economy at least since the Cold War. This column poses and provisionally answers a series of questions raised by the sanction regime, covering issues such as secondary sanctions, Russia’s supposed ‘war chest’ of currency reserves, the roles of SWIFT and crypto, Russia’s options for retaliation, and the potential for systemic risk arising from the sanctions and any retaliation.

Sergei Guriev, 14 March 2022

Sanctions against Russia continue to multiply. What will their effect be on the Russian state and its people?
Part of a series of commentaries on the economic consequences of the conflict in Ukraine.

Jon Danielsson, 11 March 2022

The cryptocurrency exchanges have only done what is legally required of them when sanctioning Russia for its invasion of Ukraine, unlike the mainstream financial institutions whose restrictions on the Russians generally exceeds what is required by law. This column argues that the implications for the future of cryptocurrencies will be considerable.

Jon Danielsson, Charles Goodhart, Robert Macrae, 10 March 2022

The Western countries have sanctioned Russia in a way not applied to any globally integrated major power in over a century, ever since 1914. This column argues that there are lessons to be learned from the 1914 systemic crisis and that high inflation and government debt will make it difficult to contain a crisis today if one emerges. 

Maksym Chepeliev, Thomas Hertel, Dominique van der Mensbrugghe, 09 March 2022

In response to the invasion of Ukraine, most OECD countries have announced punishing sanctions against Russia. But the sanctions have so far failed to target Russia’s primary source of foreign exchange – exports of fossil fuels. This column argues that while the short-term impact of restricting Russia’s fossil fuel exports on EU households’ real income would be non-trivial, the longer-term cost would be more modest and would be offset by considerable environment co-benefits. Meanwhile, the adverse impacts on the Russian economy would be overwhelming.

Ohyun Kwon, Constantinos Syropoulos, Yoto Yotov, 04 March 2022

Sanctions are now a central tool of governments’ foreign policy. This column examines the extraterritorial impact of sanctions on trade and welfare, and finds that the big extraterritorial burden of sanctions falls on target countries, whose trade with third countries is reduced significantly. Surprisingly, trade between senders and third countries increases due to sanctions. Thus, extraterritorial sanctions appear to be a stick and carrot for third countries, with the net effects depending on the size of the target and sender states and on the economic ties between the third countries/regions.

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