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International Economic Sanctions: Multipurpose Index Modelling in the Ukrainian Crisis Case

Author

Listed:
  • Nady Rapelanoro

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Bali Morad

Abstract

This short paper's goal is to create a sanction index to simulate international economic sanctions. To do so, it has been decided to focus on the Ukrainian crisis case, and on international sanctions against the Russian Federation. The first part of this paper treats the methodology and mathematical formalization used to build our index. After the mathematical formalization comes an empirical part that is demonstrating improvements brought by our work. To assess these improvements, our index is compared to a previously developed index from Kholodilin and Netšunajev (2016). Four country SVAR models are used in two main sections, two initials and two extended. Results of this section reveal that our new sanction index has a stronger explanatory power. In addition, it seems that our index affects short-term Russian production variations more sharply than its predecessor. The explanatory power improvements are confirmed by extended models, confirming our index relevance.

Suggested Citation

  • Nady Rapelanoro & Bali Morad, 2020. "International Economic Sanctions: Multipurpose Index Modelling in the Ukrainian Crisis Case," Working Papers hal-04159719, HAL.
    • Handle: RePEc:hal:wpaper:hal-04159719
    Note: View the original document on HAL open archive server: https://hal.science/hal-04159719
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    References listed on IDEAS

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    1. 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.
    2. Christian Dreger & Konstantin Kholodilin, 2015. "The Ruble between the Hammer and the Anvil: The Impact of Oil Prices and Economic Sanctions," DIW Economic Bulletin, DIW Berlin, German Institute for Economic Research, vol. 5(44), pages 587-591.
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    5. 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.
    6. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
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    More about this item

    Keywords

    Russian economy; European economies; Ukrainian crisis; economic sanctions; sanctions shock; trade relations; international crisis; structural vector autoregressive models;
    All these keywords.

    JEL classification:

    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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