|
on Confederation of Independent States |
| By: | Chupilkin, Maxim; Javorcik, Beata; Plekhanov, Alexander |
| Abstract: | This paper documents two strategies deployed to work around trade sanctions imposed on Russia after its full-scale invasion of Ukraine in 2022. These include trade intermediated through Armenia, Kazakhstan and the Kyrgyz Republic (CCA3) and a simple, yet little-documented, method whereby goods shipped via the sanctioned economy to the neighbouring countries fail to reach their intended destination. Such flows, recorded as exports in their countries of origin but not recorded as imports by destination countries, amounted to around half of total "additional" exports from the EU and the UK to CCA3 in 2022-23. Although the two strategies offset less than 10 percent of the sanctions’ impact, substitution ratios exceeded 50 percent for numerous products. Despite evasion, sanctions have resulted in a substantial increase in unit values of products exported to Russia either directly or indirectly. |
| JEL: | F14 F15 F51 |
| Date: | 2025–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20097 |
| By: | de Groot, Oliver; Skok, Yevhenii |
| Abstract: | On February 24, 2022, as Russia invaded, the National Bank of Ukraine switched from a flexible to a fixed exchange rate regime. Was this policy response optimal? To answer this, we develop an open-economy model with both nominal rigidities and frictions in borrowing on international financial markets. We find that the carefully calibrated model can rationalize the NBU’s decision: the optimal response to small shocks is to allow exchange rate flexibility, whereas in response to large shocks—such as an invasion—currency depreciation is suboptimal. For robustness, we consider tradable endowment, risk-premium, and non-tradable supply shocks, and add subsistence consumption. |
| Keywords: | Currency crises; Exchange rates; Monetary policy; Emerging markets |
| JEL: | E44 E52 F31 F41 G01 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20001 |
| By: | Egorov, Konstantin; Korovkin, Vasily; Makarin, Alexey; Nigmatulina, Dzhamilya |
| Abstract: | Using a novel comprehensive dataset on sanctions imposed on the exports to Russia after 2022, we document four stylized facts. First, these sanctions covered 33% of Russia’s pre-2022 imports in value. Second, though most of the sanctions were concentrated in a few high-tech product categories, at least as much import within these categories remained unsanctioned. Third, substantial variation exists in the specific sets of banned products across countries, despite coordinating efforts. Fourth, most sanctioning countries have already prohibited most of their pre-2022 exports to Russia, limiting their future ability to impose additional trade sanctions. |
| Keywords: | International trade; Export controls; Russia; Sanctions |
| JEL: | F13 F14 F51 P00 P33 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20192 |
| By: | Møller, Niels Framroze; Pöschl, Johannes |
| Abstract: | This study investigates the effect of the large shock to energy prices following the Russian invasion of Ukraine on bank credit to firms. To isolate the causal effect of the shock, it compares bank lending to high-energy-intensive firms to that of similar low-energy-intensive firms. Following the shock, bank credit to high-energy-intensive firms persistently declined, while their interest rates on new loans rose and other loan terms tightened. Across the distribution, safer firms reduced outstanding credit lines and paid unchanged interest rates on new bank loans, while riskier firms borrowed at higher interest rates. JEL Classification: G21, G32, Q43 |
| Keywords: | bank credit, credit register, energy price shock, firm credit, firm heterogeneity |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ecb:ecbwps:20263260 |
| By: | Andriy Tsapin (National Bank of Ukraine; National University of Ostroh Academy) |
| Abstract: | This paper examines the role of corporate governance and prudential supervision in mitigating the detrimental effects of the initial russian military invasion on the financial health of Ukrainian banks. We find that shock exposure depends on the scale of banking activity and pre-war credit risk assessments in the affected regions. This research provides evidence that enhanced governance and prudential supervision contributed positively to restoring bank financial positions following the initial attacks. Our findings demonstrate that central bank supervision yields a health-restoring effect primarily for war-sensitive banks, provided that these banks comply with regulatory requirements. Conversely, independent supervisory boards contribute more significantly to the recovery of unaffected banks. These results are robust and offer practical policy implications for both bankers and regulators. |
| Keywords: | banks, war, financial health, supervisory board, prudential supervision |
| JEL: | G21 G28 G32 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:ukb:wpaper:01/2026 |
| By: | Jackson, Karen; Luck, Phillip; Shepotylo, Oleksandr |
| Abstract: | Russia's full-scale invasion of Ukraine in February 2022 raised a critical question: do military alliances strengthen or fracture trade ties when war breaks out? This paper shows they strengthen them. Using monthly bilateral trade data through August 2025, we find that NATO members traded approximately 9-15% more with one another after the invasion relative to non-NATO pairs - a premium that persisted and grew through 2025. These effects are not limited to the war period: applying a disaggregated structural gravity framework over 1948-2022, we estimate that NATO accession generates 12-27% increases in bilateral exports, concentrated in dual-use, differentiated, and intermediate goods consistent with defence-industrial supply-chain. Moreover, there is synergy between security and economic cooperation as the effect of NATO is strenghened by the EU membership. |
| Keywords: | trade, geopolitics, NATO, security |
| JEL: | F14 F53 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:342407 |
| By: | Parviainen, Sinikka |
| Abstract: | Russia's regions bear a rapidly growing share of the fiscal costs of war. Since showing surpluses as recently as 2021, the collective regional deficit quadrupled in a single year. Using five years of budget execution reports from the Russian Federal Treasury across all 85 Russian regions (federal subjects), we construct a war-cost composite measuring the fiscal opportunity cost of the war in each region and build a typology for classifying regions by their dominant fiscal relationship with the war. According to our conservative estimate, war-related regional spending reached nearly 1 trillion roubles in 2025, more than double from 2021. The adverse turn for healthcare is particularly notable. Regional healthcare lost 3.5 percentage points of budget spending share and an over 20 % real terms decline in spending, the largest real-term contraction in any major spending category. Moreover, the effects of wartime are not uniform across the regions. Direct war costs have fallen heaviest on frontline war-burdened regions, while military-industrial regions have captured a defence-wage windfall. Commodity exporters face a collapsing revenue base, while peripheral regions remain structurally transfer-dependent. A supplementary section documents Russia's attempts at fiscal absorption of the four illegally occupied Ukrainian territories. |
| Keywords: | Russia, economy, budget, war, regions |
| JEL: | H56 H72 H77 R11 P26 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitb:342403 |
| By: | Vasily Astrov (The Vienna Institute for International Economic Studies, wiiw); Ioannis Gutzianas (The Vienna Institute for International Economic Studies, wiiw); Marko Hočevar; Mario Holzner (The Vienna Institute for International Economic Studies, wiiw); Branimir Jovanović (The Vienna Institute for International Economic Studies, wiiw); Sabina Lange; Bernd Christoph Ströhm (The Vienna Institute for International Economic Studies, wiiw) |
| Abstract: | Editorial insight From crisis spillover to energy resilience CESEE’s hydrocarbon vulnerabilities and policy pathways by Mario Holzner Persistent hydrocarbon-import dependence exposes CESEE to external shocks. Despite recent progress on diversification, resilience remains uneven. To achieve strategic autonomy, governments and businesses must prioritise energy efficiency, regional integration and supply diversification. Chart of the month Withdrawal of foreign capital from Russia losing pace by Vasily Astrov The active withdrawal of foreign capital from Russia, which started with the war and sanctions, has more recently lost momentum. This should come as no surprise, because in the current circumstances withdrawal effectively entails writing off the bulk of the investment. Macro snapshot How does the current inflationary shock in CESEE compare so far with that of 2022? by Branimir Jovanović The main reason why inflationary pressures in CESEE driven by the war in the Middle East have been weaker than in March 2022, following Russia’s invasion of Ukraine, is that food price increases have remained muted, whereas back in 2022 they were immediate and sharp. Focus of the month Sanctions, energy and geopolitical balancing Serbia between Russia and the West by Bernd Christoph Ströhm Since 2008, following the acquisition by Russia’s Gazprom Neft of a majority stake in NIS, the Serbian business has evolved from being just the national oil company into a strategically significant asset. The US sanctions imposed in 2025 against the company, however, forced a realignment of Serbia’s energy policy, with NIS ownership being transferred to Hungary’s MOL. Although the loss of a strategic energy asset reduces Russia’s leverage over Serbia, the cooperative manner of Russia’s approach in handling the takeover suggests that close political relations between Moscow and Belgrade are here to stay. Research in brief Scaling up CESEE innovation ecosystem dynamics and strategic relocation opportunities Client Vienna Business Agency/Wirtschaftsagentur Wien by Ioannis Gutzianas Despite strong growth in startup activity across Central, East and Southeast Europe (CESEE), many promising firms struggle to scale into globally competitive companies, often relocating abroad in search of deeper capital markets and more developed innovation ecosystems. Minimum-wage increases do not harm firms evidence from North Macedonia Client Austrian Agency for International Cooperation in Education and Research by Branimir Jovanović The 27% hike in the statutory minimum wage in North Macedonia in 2017 had no adverse effect on businesses. Those companies that were more exposed did not experience lower profitability than those that were less exposed, and nor is there any evidence of a decline in employment. Meanwhile, productivity rose more in firms that were more strongly affected by the reform. Country in focus Slovenia - A subtle shift to the right by Marko Hočevar and Sabina Lange Following the parliamentary election on 22 March, which resulted in a hung parliament, a populist right-wing party has emerged as kingmaker. The three-time prime minister Janez Janša of the centre-right Slovenian Democratic Party, trying to keep his balance while gingerly stretching further to the right, is poised to return for a fourth term in office, this time with a minority government, an unreliable ally in parliament and a strong opposition. |
| Keywords: | energy prices, energy import dependence, foreign capital, exit restrictions, inflation, energy inflation, food inflation, NIS refinery, Gazprom Neft, MOL Group, US sanctions, innovation, start-ups, capital markets, minimum wage, profitability, employment, parliamentary elections, hung parliament, minority government |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:wii:mpaper:mr:2026-04 |
| By: | Etienne Farvaque (University of Lille, CNRS, IESEG School of Management, Lille; CIRANO, Montréal); Alexander Mihailov (Department of Economics, University of Reading); Piotr Stanek (Department of International Economics, Krakow University of Economics) |
| Abstract: | This paper examines how monetary policy rules operate under conditions of institutional reform, external constraints, and war in Ukraine as a case of prospective European monetary integration. Using monthly data from 2009 to 2026, we estimate Taylor-type reaction functions for the National Bank of Ukraine, allowing the setting of the policy rate to respond to inflation gaps, industrial-production activity gaps, exchange-rate pressure, interest-rate smoothing, and regime-specific wartime interactions. We then compute deviations between actual and model-implied policy rates and test whether these deviations are associated with institutional shifts, geopolitical shocks, conflict intensity, and social disruption. The results show that Ukrainian monetary policy remained partly rule-like even during periods of extreme stress. Interest-rate smoothing is strong, exchange-rate pressure enters the effective reaction function, and the largest deviations cluster around moments of nonlinear constraints: the 2015 currency crisis, the initial full-scale-invasion policy freeze, and the June 2022 credibility-restoring interest rate hike. These findings suggest that wartime central banking is not best understood as a suspension of rules. Rather, war generates constraint-contingent rule adaptation, in which credibility is preserved through temporary modifications of the instruments, coefficients, and state variables governing policy. The paper contributes to debates on rules versus discretion by showing how monetary-policy credibility can coexist with resilience-oriented adjustment in an emerging market economy exposed to geopolitical rupture. It also speaks to Ukraine’s European trajectory: eventual monetary integration will depend not only on nominal convergence, but on the demonstrated capacity to preserve rule-based credibility under extreme political and security shocks. |
| Keywords: | Taylor-type rules, Ukraine, exchange-rate stabilization, inflation targeting, geopolitical risk, wartime monetary policy, National Bank of Ukraine |
| JEL: | E52 E58 F31 F41 O52 P34 |
| Date: | 2026–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2026-08 |
| By: | Fernández-Villaverde, Jesús; Li, Yiliang; Xu, Le; Zanetti, Francesco |
| Abstract: | We examine the rise of dark shipping -- oil tankers disabling AIS transceivers to evade detection -- amid Western sanctions on Iran, Syria, North Korea, Venezuela, and Russia. Using a machine learning-based ship clustering model, we track dark-shipped crude oil trade flows worldwide and detect unauthorized ship-to-ship transfers. From 2017 to 2023, dark ships transported an estimated 7.8 million metric tons of crude oil monthly -- 43\% of global seaborne crude exports -- with China absorbing 15\%. These sanctioned flows offset recorded declines in global oil exports but create distinct economic shifts. The U.S., a net oil exporter, faces lower oil prices but benefits from cheaper Chinese imports, driving deflationary growth. The EU, a net importer, contends with rising energy costs yet gains from Chinese demand, fueling inflationary expansion. China, leveraging discounted oil, boosts industrial output, propagating global economic shocks. Our findings expose dark shipping's central role in reshaping oil markets and macroeconomic dynamics. |
| JEL: | C32 C38 E32 Q43 R40 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20009 |
| By: | Kerola, Eeva; McCully, Tuuli; Nuutilainen, Riikka |
| Abstract: | This paper examines whether China has reallocated import sourcing away from West-leaning economies amid heightened geoeconomic tensions and a policy push to strengthen supply chain security. Using monthly bilateral trade data for 121 economies over 2015-2025 and a difference-in-differences framework, we compare changes in countries' shares of China's imports across blocs defined by their official positioning on Taiwan. We find evidence of a relative decline in imports from Westleaning countries beginning in 2018, with divergence strengthening after 2020 and intensifying further in 2022. The pattern is concentrated on a limited set of rawmaterial sectors, especially mineral products and base metals. For goods covered by Western export controls to Russia, we find no evidence of a broader shift in China's sourcing. Overall, China's import realignment appears broad-based across West-leaning source countries, but has so far remained selective across product categories. China's shift toward importing from friendly nations is likely to contribute to larger bilateral trade surpluses with Western economies, provided that China's exports to these markets remain robust. |
| Keywords: | China, international trade, supply chains, fragmentation |
| JEL: | F12 F13 F14 F51 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:bofitp:342408 |
| By: | Mirkasimov, Bakhrom; Parpiev, Ziyodullo; Wolfson, Inna |
| Abstract: | Climate change is likely to reshape agriculture in an irrigated, water-scarce transition economy like Uzbekistan. We use IFPRI's International Model for Policy Analysis of Agricultural Commodities and Trade (IMPACT) model and evaluate the direct effects of climate change on Uzbekistan’s agriculture through 2050. We assume changes in GDP, population, and technological progress to be exogenous. We find that climate change and the corresponding temperature increase will have significant adverse effects on the long-term yields of cotton and wheat through changes in water availability, precipitation patterns, crop yields, and the use of land, water, and other natural resources, but harvested area responses may differ. All climate change scenarios are similar in predicting an increase in harvested area for temperate fruits and vegetables, but their yield gains remain conditional on market prices, policy reform, water use and institutional constraints. For policymakers, this makes climate change adaptation actions an opportunity for incentives and structural reforms as well as for technology to adapt to changing environmental conditions and to ensure food security. |
| Keywords: | climate change; climate change adaptation; mathematical models; climate change impacts; modelling; Uzbekistan; Central Asia; Asia |
| Date: | 2026–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:fpr:cenawp:183323 |
| By: | International Monetary Fund |
| Abstract: | Macroprudential governance has advanced following recent reforms yet clarifying mandates and strengthening coordination remain essential for timely and effective action. The National Bank of Moldova (NBM) sits at the center of the framework—supervising both banks and non-bank lenders after the 2023 twin-peaks reform—while the National Commission for Financial Markets (NCFM) oversees capital markets. This consolidation has enhanced oversight and consistency. Both institutions are operationally independent and legally tasked with preserving financial stability, but the Law on the NBM assigns equal weight to financial stability and support of government policy without a clear hierarchy, raising the risk of ambiguity when objectives conflict. Policy coordination and information exchange occur through the National Committee for Financial Stability (NCFS), the formal macroprudential authority and high-level inter-agency forum with comply-or-explain powers. Coordination and communication have also improved through internal mechanisms (e.g., a Financial Stability Working Group—FSWG—and frequent Board discussions) and external outputs—an annual Financial Stability Report (FSR; since 2019), a quarterly Financial Stability Assessment Report (since 2024), a macroprudential policy strategy, and publication of material on the NBM website. |
| Date: | 2026–06–11 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfscr:2026/137 |
| By: | José Alves; João Estevão |
| Abstract: | Europe’s energy geopolitics is usually told as a story of changing suppliers – Russian gas yesterday, Chinese clean technology tomorrow. Electrification adds a second, more local geopolitics, defined by who sits at the centre of the grid, who runs into bottlenecks, and who can call on flexibility when stress hits. Using public data alone, we build a bidding-zone-month panel covering 41 European zones over 2019-2025 and test six pre-stated hypotheses about how this internal layer redistributes price volatility, negative-price exposure, net imports, and cross-border price gaps. Three findings survive our identification checks. More cross-zonal capacity lowers net imports in average months, confirmed quasi-experimentally around the NordLink and Viking Link HVDC commissionings. Higher renewable shares raise within-month price volatility once network position is held fixed – about 1.8 EUR/MWh per ten percentage points of renewable share – concentrated in the network-central half of the panel. And the 2022 gas crisis widened the gap between EU-27 and non-EU European zones: integration transmitted the shock into the most-connected jurisdictions instead of dampening it. The flexibility-moderation prediction fails. Energy sovereignty in an electrified Europe is best understood as advantageous positioning within regional infrastructure, not separation from it; integration is double-edged. |
| Keywords: | electricity interdependence; energy transition; strategic vulnerability; congestion; Europe; energy security. |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:ise:remwps:wp04252026 |
| By: | Walid Faris; Mr. Etibar Jafarov; Umang Rawat |
| Abstract: | Across much of the Middle East and Central Asia (ME&CA), market competition remains weaker than in other emerging markets, holding back productivity and income growth. Using firm-level data from Orbis for 2002–2021, this paper studies the evolution of market competition in ME&CA economies and examines how trade policy and institutions shape competitive dynamics. We find that market power remains substantial and uneven across ME&CA, with particularly high markups in resource-intensive activities, selected service sectors, and—more recently—manufacturing in the Caucasus and Central Asia (CCA). Higher tariff protection is systematically associated with faster growth in markups, indicating that trade barriers weaken competitive pressure, while improvements in competition policy, anti-corruption frameworks, and property rights are linked to declining market power and hence increasing competition. Although productivity gaps remain large and persistent, stronger competition is associated with faster firm-level productivity growth and higher GDP per capita growth, with these effects particularly pronounced in CCA economies. Overall, the findings highlight the importance of policies aimed at reducing trade barriers and strengthening institutional and competition policy frameworks to foster competition, raise productivity, and support long-term income growth in the ME&CA region. |
| Keywords: | market power; markups; total factor productivity; tariffs; competition policy; Middle East and Central Asia; productivity gaps |
| Date: | 2026–07–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/143 |
| By: | Sonin, Konstantin |
| Abstract: | Why did the Soviet Union organize regular elections, national and local, with one candidate and reported 99.9% support with 99.9% turnout? Were the Soviet citizens so stupid that they did not understand that they have no say in choosing their government? The Reverse Cargo Cult metaphor explains why dictators tell their citizens lies that citizens know to be lies: a verifiable lie told by a politician changes citizens' perceptions of politicians and reduces their willingness to replace them. The model explains the mechanics of authoritarian propaganda that puts much emphasis on persuading citizens how bad foreign politicians are. |
| JEL: | P00 D85 L82 |
| Date: | 2025–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:20316 |
| By: | International Monetary Fund |
| Abstract: | Selected Issues |
| Date: | 2026–06–23 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfscr:2026/153 |
| By: | International Monetary Fund |
| Abstract: | Armenia’s economic performance surpassed expectations in 2025. Growth was higher than projected, supported by robust domestic demand. The fiscal primary balance exceeded the program target by a comfortable margin and headline inflation hovered around the central bank’s target before picking up early in 2026. The impact from the war in the Middle East is mostly contained, although trade disruptions and higher oil prices are expected to exert some pressure on inflation and the economy. Economic relations with Türkiye and Azerbaijan are showing signs of improvement, even if the full implementation of the peace agreement with Azerbaijan initialed in August 2025 may take time. A general election is scheduled for June 7, 2026. |
| Date: | 2026–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfscr:2026/132 |
| By: | Peng, Cong; Zhang, Enqi |
| Abstract: | Many areas in sub-Saharan Africa remain poorly connected to reliable road networks, while domestic food distribution relies heavily on road transport. Meanwhile, because most countries import refined fuel, shocks in global oil markets may translate into higher inland transport frictions and food prices, especially in remote markets. We examine how road-network remoteness shapes the transmission of international oil prices into local maize prices across 19 countries in subSaharan Africa. The analysis uses monthly market-level data from January 2021 to December 2023, a period that includes the sharp increase in international oil prices following the 2022 RussiaUkraine war. We measure market-level remoteness exposure by interacting road-network distance to ports with international oil prices. To address endogeneity concerns, we use an IV strategy that instruments remoteness exposure with proximity to straight lines connecting major mines and ports active before 2000, interacted with oil supply news shocks. The IV estimates imply that when international oil prices increased from $74 to $123 per barrel (as it did between December 2021 and June 2022), local maize prices would be 30.343% higher in a market located 500 km farther from ports than in an otherwise comparable market closer to ports. The estimated effect is stronger in areas with poorer agricultural production conditions, where weaker local production buffers make maize prices more vulnerable to oil price shocks in remote markets. As an extension, contemporaneous remoteness exposure is associated with higher local conflict events and fatalities, while lagged exposure has no detectable effect. These results highlight the need to account for road-network remoteness and local production buffers when assessing how global energy shocks translate into local food price vulnerability |
| Keywords: | International Development |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404636 |