Browsing by Subject "sanctions"

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  • Gould-Davies, Nigel (2018)
    BOFIT Policy Brief 8/2018
    This brief assesses the effectiveness of Western sanctions on Russia, and their likely future impact. It examines the unique features of Russia as a sanctions target in the context of global sanctions experience. It then considers the goals that sanctions are intended to achieve, their impact so far, and the second-order effects of Russia’s responses. It concludes that, although the factors that typically correlate with sanctions success are absent, sanctions on Russia have nonetheless achieved important goals relatively quickly. Their impact will increase over time. Though speculative at this stage, recent oligarch sanctions and more stringent scrutiny may have significant consequences. They pose new and difficult choices for Russia’s business elite, much of which is dependent on the global economy. How oligarchs resolve these dilemmas has important implications for Russia’s domestic evolution.
  • Kaaresvirta, Juuso (2022)
    Bank of Finland Bulletin. Blog
    A month ago, during President Vladimir Putin’s visit to Beijing, China and Russia declared that the friendship between them has “no limits” and that there are “no forbidden areas of cooperation”. A few weeks later, Russia attacked Ukraine. A majority of countries around the world have condemned the illegal invasion. Perhaps as a demonstration of the “no limits” friendship, China has refused to condemn Russia and instead has even shown some understanding of its actions.
  • Barseghyan, Gayane (2019)
    BOFIT Discussion Papers 24/2019
    Taking the multilateral sanctions program launched against Russia in 2014 as a case study, this paper investigates the economic effects of sanctions and counter-sanctions on a target economy. A synthetic control method for comparative case studies is employed to construct counterfactuals. The estimation results demonstrate that in Russia following sanctions and counter-sanctions real GDP per capita, FDI net in flows and income inequality fell, while the ban on agricultural and food imports introduced by Russia boosted the domestic agricultural sector, resulting in higher agricultural productivity and farm worker incomes. Various placebo studies confirm the significance of obtained estimates. Results are robust to random donor samples.
  • Korhonen, Iikka (2019)
    BOFIT Policy Brief 2/2019
    In this note, I review the literature on the economic effects of sanctions against Russia and Russia’s counter-sanctions. As a general observation, studies of the macroeconomic effects of sanctions on Russia and their effects on international trade and financial flows must deal with the nearly concurrent oil price collapse at the introduction of sanctions. Most papers support the view that sanctions have worked as planned, noting the drag they have imposed on Russia’s general economic development since 2014. This adverse effect most likely operates by depressing both foreign trade and foreign capital flows into Russia. Russia’s own counter-sanctions have also had a clear negative effect on the welfare of the average Russian household.
  • Korhonen, Iikka; Simola, Heli; Solanko, Laura (2018)
    BOFIT Policy Brief 4/2018
    This note briefly reviews the history and current impacts of sanctions on Russian entities imposed by the EU, US and others, as well as Russia’s counter-sanctions imposed on Western countries. A large drop in price of oil in 2014 and 2015 coincided with these measures, complicating our efforts to tease out the specific economic effects of sanctions on the Russian economy. While it is clear that the decline in oil prices had a substantially larger impact on Russian GDP in 2014−2016 than sanctions, the sanctions regime proved effective in restricting access of Russian banks to capital. Looking specifically the impacts on EU countries, we note that the declines in trade with Russia and the EU’s reduced market share in Russia are to some extent continuations of long-term trends. Russia’s counter-sanctions have targeted, among other things, EU food exports to Russia. While the macroeconomic effects Russia’s counter-sanctions on the EU have been marginal, food sector in some EU countries has been affected. Russia’s counter-sanctions have also directly lowered consumption of affected goods in Russia.
  • Dreger, Christian; Fidrmuc, Jarko; Kholodilin, Konstantin; Ulbricht, Dirk (2015)
    BOFIT Discussion Papers 25/2015
    Published in Journal of Comparative Economics, Vol. 44, Issue 2, May 2016, Pages 295–308 as Between the hammer and the anvil: The impact of economic sanctions and oil prices on Russia’s ruble
    The exchange rate fluctuations strongly affect the Russian economy, given its heavy dependence on foreign trade and investment. Since January 2014, the Ruble lost 50% of its value against the US Dollar. The fall of the currency started with the conflict between Russia and Ukraine. The impact of the conflict on Russia may have been amplified by sanctions imposed by Western countries. However, as Russia is heavily dependent on exports of natural re-sources, the oil price decline starting in Summer 2014 could be another factor behind the deterioration. By using high frequency data on nominal exchange and interest rates, oil prices, actual and unanticipated sanctions, we provide evidence on the driving forces of the Ruble exchange rate. The analysis is based on cointegrated VAR models, where fundamental long-run relationships are implicitly embedded. The results indicate that the bulk of the depreciation can be related to the decline of oil prices. In addition, unanticipated sanctions matter for the conditional volatility of the variables involved.
  • Simola, Heli (2022)
    BOFIT Policy Brief 4/2022
    The EU, US and several other countries have responded with a wide range of new economic sanctions on Russia in response to the military attack on Ukraine. These sanctions include various restrictive measures on trade with Russia. In this brief, we examine the potential short-term effects of trade sanctions on Russian production with an input-output framework. We find that the trade sanctions can have substantial negative effects on Russian production when Russia is unable to find alternative markets for imports and exports. Keywords: Russia, trade, sanctions, input-output
  • Davydov, Denis; Sihvonen, Jukka; Solanko, Laura (2021)
    BOFIT Discussion Papers 5/2021
    This paper uses textual analysis to examine how European corporations assess sanctions in their annual reports. Using observations from a panel of almost 11,500 corporate annual reports from 2014–2017, we document significant cross-country variation in how firms perceive Russia-related sanctions. Even after controlling for firm-level characteristics, cross-country differences remain for sentiments about sanctions and contexts in which sanctions are mentioned. We also examine the role of macroeconomic linkages in explaining these differences. We show that the Russia’s inward and outward FDI stocks and high levels of imports and exports with Russia only partially explain the cross-country variation, leaving a nontrivial share of variation unexplained.