Omel'chenko A.N.Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russian Federation alexey.omelchenko@mail.ru ORCID id: not available
Khrustalev E.Yu.Central Economics and Mathematics Institute, Russian Academy of Sciences, Moscow, Russian Federation stalev777@yandex.ru ORCID id: not available
Importance The assessment and evaluation of an impact of sanctions on various economies are important and timely, being the subject of some researches by foreign and Russian authors. Objectives We attempt to build a simple model of the sanction intensity index with evidence from Russia. To assess an impact of different sanctions, we included not only the volume of bilateral trade relations with Russia, but also a percentage of respective currency in the foreign debt of Russia’s economic sectors, size and coherence of legal entities and financial institutions subject to financial sanctions, and role of the sanctioned country in tight oil and gas production. Methods We use a set of methods and principles of scientific cognition and research, methods of logic and statistical analysis as the methodological framework. Results The modified sanction index gives a more detailed view of trends and severity of sanctions in comparison with the proposed indicator. We demonstrate that the intensity of sanctions falls if specific factors are considered. The proposed index can substitute the political risk factor in macroeconomic models of Russia and debt capital market development modeling. Conclusions and Relevance Having analyzed resultant weights of the modified sanction index, we found that sanctions against too-big-to-fail banks have the strongest effect. Sanctions against the Oil&Gas sector have the least significance for the debt capital market of Russia since the Oil&Gas sector accounts for a small share in external financing. The effect grows in the mid term if we consider investment expenses for exploration and production of oil and gas, with some of them being financed through the debt.
Keywords: sanction index, debt capital market, effective interest rate
References:
Hufbauer G., Schott J., Elliott K., Oegg B. Economic Sanctions Reconsidered. Washington, DC, Peterson Institute for International Economics, 2009, 248 p.
Hufbauer G.C., Schott J.J., Elliott K.A. Economic Sanctions Reconsidered: History and Current Policy. Washington, D.C., Peterson Institute for International Economics, 1990.
Kholodilin K.A., Netsunajev A. Crimea and Punishment: The Impact of Sanctions on Russian and European Economies. DIW Discussion Papers, 2016, no. 1569.
Gurvich E.T., Prilepskii I.V. [The impact of financial sanctions on the Russian economy]. Voprosy Ekonomiki, 2016, no. 1, pp. 5–35. (In Russ.)
Sinyakov A., Roitman A., Seleznev S. Dinamika potentsial'nogo VVP Rossii posle neftyanogo shoka: rol' sil'nogo izmeneniya otnositel'nykh tsen i strukturnykh zhestkostei [Trends in the potential GDP of Russia after the oil price shock: The role of significant changes in relative prices and structural rigidities]. Moscow, Bank of Russia Publ., 2015, 53 p.
Davis L., Engerman S. Sanctions: Neither War nor Peace. Journal of Economic Perspectives, 2003, vol. 17, no. 2, pp. 192. URL: Link
Jonas Frank. The Empirical Consequences of Trade Sanctions for Directly and Indirectly Affected Countries. FIW Working Paper series, 2017, no. 174, p. 17.
Dreger C., Fidrmuc J., Kholodilin K., Ulbricht D. Between the Hammer and the Anvil: The Impact of Economic Sanctions and Oil Prices on Russia's Ruble. Journal of Comparative Economics, 2016, vol. 44, iss. 2, pp. 295–308. URL: Link
Morgan T.C., Bapat N., Kobayashi Y. Threat and Imposition of Economic Sanctions 1945–2005: Updating the TIES Dataset, Conflict Management and Peace Science. Peace Science Society (International), 2014, vol. 31, pp. 541–558.
Omel'chenko A.N., Khrustalev E.Yu. [Sanctions against Russia and their impact on the availability of financing for Russian corporates]. Audit i finansovyi analiz = Audit and Financial Analysis, 2016, no. 4, pp. 261–266. (In Russ.)
Omel'chenko A.N., Khrustalev E.Yu. [The credit-investment potential of the Russian banking sector]. Den'gi i kredit = Money and Credit, 2011, no. 4, pp. 23–29. (In Russ.)
Hoffmann M., Neuenkirch M. The Pro-Russian Conflict and its Impact on Stock Returns in Russia and the Ukraine. University of Trier Research Papers in Economics, 2015, no. 1-15, pp. 10–17.
Pape R.A. Why Economic Sanctions Do Not Work. International Security, 1997, vol. 22, iss. 2, pp. 90–136. URL: Link
Kazun А. Rally-Around-The-Flag and the Media: Case of Economic Sanctions in Russia. Basic Research Program Working Papers, 2016, no. WP BRP 33/PS/2016, 26 p.
Seitz W., Presbitero A., Zazzaro A. Sanctions and Public Opinion: The Case of the Russia-Ukraine Gas Disputes. IDE Discussion Papers, 2017, no. 652.
Kazantsev S.V. [Sanctions on Russia – Yesterday and today]. EKO =ECO, 2015, no. 3, pp. 63–78. (In Russ.)
Fedorova E., Fedotova M., Nikolaev A. [Assessing the impact of sanctions on Russian companies performance]. VoprosyEkonomiki, 2016, no. 3, pp. 34–45. (In Russ.)
