The Impact of Trade Restrictions on Russia on European Prices of Sanctioned Goods

Details

Supervisors

Vannoorenberghe, Gonzague

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale, à finalité spécialisée

Abstract

In February 2022, Russian Federation started a military invasion in Ukraine and in response, European authorities imposed different type of sanctions. In addition to political and financial sanctions, an important role was given to trade sanctions. In this paper we will try to understand how deep European Union was affected by its own restrictive tools. To be more precise, we will analyse the impact of sanctions on European prices of these sanctioned goods. To assess the problem, we used a weighted average price indices and implemented Difference-in-Difference method to see the direct effect of sanctions. Mainly these restrictions caused a short-term shock and a price decline in a long term for the goods in which Russian participation was relatively high. We cannot recommend to cancel the sanctions or never impose the new ones but we can advise to be more prepared for the “friendly fire” effect by diversifying the source of goods which can be sanctioned in future or those which have strategic importance.