Should we care? : The economic effects of financial sanctions on the Russian economy

Show full item record

Title: Should we care? : The economic effects of financial sanctions on the Russian economy
ISBN: 978-952-323-281-5
Author: Pestova, Anna ; Mamonov, Mikhail
Organization: Bank of Finland
Department / Unit: Institute for Economies in Transition (BOFIT)
Series: BOFIT Discussion Papers
ISSN: 1456-5889
Series year: 2019
Series number: 13/2019
Year of publication: 2019
Publication date: 29.7.2019
Pages: 47
Subject (yso): öljy; hinnat; pakotteet; vaikutukset; velat; talouskasvu; bruttokansantuote; yritykset; ennusteet
Keywords: Bofit-kokoelma; VAR; Venäjä; mallit
JEL: C51; E37; E44; F34
Other keywords: financial sanctions; conditional macroeconomic forecasting; oil prices; corporate external debt; Bayesian VAR
Abstract: We employ a Bayesian VAR model to estimate the economic effects on the Russian economy from Western financial sanctions imposed in 2014. Sanctions caused a decrease in the amount of out-standing Russian corporate external debt, but it occurred during an episode of falling oil prices. We disentangle the effects of sanctions and oil prices by computing out-of-sample projections of key Russian macroeconomic variables conditioned solely on the oil price drop and on both the oil price drop and external debt deleveraging. Declining oil prices alone do not explain the depth of economic crisis in Russia, but we get rather accurate conditional forecasts when the actual path of external debt deleveraging is added. We treat the difference between these two projections as the effect of sanctions against Russia. The effect is modest, yet significant, for most of the variables discussed. While our estimate of the impact of sanctions on GDP growth has large uncertainty, over two-thirds of the density lies in the negative area.

Files in this item

Total number of downloads: Loading...

Files Size Format View
dp1319.pdf 983.0Kb PDF View/Open

This item appears in the following Collection(s)

Show full item record