nep-tra New Economics Papers
on Transition Economics
Issue of 2023‒06‒26
eight papers chosen by
Maksym Obrizan
Kyiv School of Economics

  1. What the literature says about the effects of sanctions on Russia By Simola, Heli
  2. The shift in Russian trade during a year of war By Simola, Heli
  3. Firms and wage inequality in Central and Eastern Europe By Iga Magda; Jan Gromadzki; Simone Moriconi
  4. To Russia with love? The impact of sanctions on regime support By Gold, Robert; Hinz, Julian; Valsecchi, Michele
  5. Public Opinion and Immigration in Europe: Can Regional Migration Flows Predict Public Attitudes to Immigration? By Lenka Dražanová; Jérôme Gonnot
  6. Blowback: The effect of sanctions on democratic elections By Crozet, Matthieu; Hinz, Julian
  7. Who is to suffer? Quantifying the impact of sanctions on German firms By Görg, Holger; Jacobs, Anna; Meuchelböck, Saskia
  8. Political cycles of media repression By Schulze, Günther G.; Zakharov, Nikita

  1. By: Simola, Heli
    Abstract: This policy brief frames the discussion of sanctions imposed on Russia since the invasion of Ukraine in a wider international and historical perspective. We present a brief review of recent literature related to the macroeconomic effects of sanctions in Russia and other countries. Our analysis suggests that the general economic effects of the war and sanctions on Russia are neither unprecedented nor insignificant in comparison to previous sanction episodes. The literature also suggests that while the overall economic effects of sanctions on Russia have been diluted by various factors, they have strongly affected the parts of the Russian economy they target.
    Keywords: Russia, war, sanctions, trade, FDI
    Date: 2023
  2. By: Simola, Heli
    Abstract: This note examines changes in Russia's foreign trade during the past year. We discuss general trends in Russia's trade based on estimates constructed from mirror statistics and developments in EU-Russia trade. The detailed analysis of Russia's technology imports includes a selection of goods subject to EU export restrictions. We find substantial fluctuations in Russia's trade flows and changes in its geographical structure. EU trade with Russia has generally declined substantially and Russia is not an important export market for most EU countries. Our findings suggest that Russia has been unable to find viable substitutes for many EU imports at the aggregate level and most individual technology goods subject to EU export restrictions. Other countries have stepped into the breach and increased their exports to Russia, and in the case of certain products, their exports even exceed the comparable imports lost from the EU.
    Keywords: Russia, Ukraine, trade, sanctions
    Date: 2023
  3. By: Iga Magda; Jan Gromadzki; Simone Moriconi (LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique)
    Abstract: We use large linked employer-employee data to analyze wage inequality patterns in Central and Eastern European (CEE) countries between 2002 and 2014. We show that, unlike in many other advanced economies, wage inequality levels have decreased in almost all CEE countries. These reductions in wage inequality resulted from disproportionately large increases in wages at the bottom of the wage distribution, and from decreases in between-firm wage inequality. We further find that the declines in wage inequality were driven by large wage structure effects that compensated for changes in the composition of workers.
    Keywords: Wages, Wage inequality, RIF Regression, Quantile decomposition, Linked employer-employee data
    Date: 2021–06
  4. By: Gold, Robert; Hinz, Julian; Valsecchi, Michele
    Abstract: Do economic sanctions affect internal support of sanctioned countries' governments? To answer this question, we focus on the sanctions imposed on Russia in 2014 and identify their effect on voting behavior in both presidential and parliamentary elections. On the economic side, the sanctions significantly hurt Russia's foreign trade - with regional-level variation. We use trade losses caused by the sanctions as measure for regional sanction exposure. For identification, we rely on a structural gravity model that allows us to compare observed trade flows to counterfactual flows in the absence of sanctions. Difference-in-differences estimations reveal that regime support significantly increases in response to the sanctions, at the expense of voting support of Communist parties. For the average Russian district, sanction exposure increases the vote share gained by president Putin and his party by 13 percent. Event studies and placebo estimations confirm the validity of our results.
    Keywords: Economic sanctions, voting behavior, gravity estimation, rally-around-the-flag
    JEL: F12 F14 F15
    Date: 2023
  5. By: Lenka Dražanová; Jérôme Gonnot
    Abstract: This article investigates how European public opinion has responded to short-term variations inregional foreign-born immigration over the past decade (2010-2019). Combining data from theEuropean Social Survey and the European Union Labour Force Survey, we test how natives’opinions over migration policy and the contribution of immigrants to society have changed with thenet rate of international migrants in 183 EU regions from 21 countries. We find that while EuropeanUnion natives living in regions with a higher share of foreign-born populations are generally less antiimmigrant, a short-term increase in the number of immigrants within a given region is associated withmore negative attitudes in Western Europe only. Moreover, our gender and origin decompositionindicate that male immigrants and those born outside of the European Union are driving most ofthe negative association between public opinion and changes in the level of immigration in WesternEuropean countries, while the educational attainment of migrants makes little difference. The scopeof our analysis for Central and Eastern Europe is more limited due to the smaller share of foreignbornimmigrants living in those regions. Despite this caveat, our analysis suggests that inflows ofEuropean migrants in Central and Eastern Europe are generally associated with more positiveviews towards immigration, regardless of their skill level. Our findings demonstrate the importanceof temporal dynamics for attitudes to immigration. They also point to the need to analyse not onlycross-country differences but also regional differences in those attitudes.
    Keywords: Attitudes to immigration, migration flows, public opinion, regions
    Date: 2023–03
  6. By: Crozet, Matthieu; Hinz, Julian
    Abstract: Sanctions are meant to coerce political adversaries through economic measures. However, evidence for their effectiveness is scarce. In this paper we assess the impact of sanctions on a democracy - France - by studying the electoral consequences of the sanctions and countersanctions imposed between Russia and Western countries. Contrary to most of the existing literature we find clear evidence for exposure to the sanctions to cause an increase in the vote share for pro-Russian (and far-right) candidates during the French 2017 presidential election. Locally, the impact on voting is substantial. Back-of-the-envelope calculations indicate that about 16, 300 votes for the main far-right candidate can be directly attributed to the sanctions' impact. This is the total number of votes cast in a medium-sized French city. It is however not nearly enough to have affected the outcome of the election at the national level.
    Keywords: Sanctions, Elections, Embargo, Russia, France
    JEL: F13 F51 D72 D74
    Date: 2023
  7. By: Görg, Holger; Jacobs, Anna; Meuchelböck, Saskia
    Abstract: In this paper, we use a novel firm level dataset for Germany to investigate the effect of sanctions on export behaviour and performance of German firms. More specifically, we study the sanctions imposed by the EU against Russia in 2014 in response to the annexation of Crimea and Russia's countermeasures. We find a substantial negative effect on both the extensive and intensive margin of German exports. While the negative effects are strongest for firms exporting products subject to trade restrictions, we provide further evidence on the indirect effects of sanctions. Analysing the impact on broader measures of firm performance, we document that the cost of sanctions is heterogeneous across firms but overall modest. Our results reveal that the negative impact of the shock was concentrated primarily among a small number of firms that were highly dependent on Russia as an export market and those directly affected by the sanctions.
    Keywords: sanctions, foreign policy, trade, firm behaviour, Germany
    JEL: F1 F14 F51 L25
    Date: 2023
  8. By: Schulze, Günther G.; Zakharov, Nikita
    Abstract: We analyze media repression in Putin's Russia (2004-2019), a smart dictatorship that mimics democratic institutions, notably relatively free elections, and a relatively free press. Drawing on a unique granular dataset on journalist harassment and the pre-determined, staggered timing of local elections, we find evidence of strong political cycles of media repression. This media repression ahead of elections leads to a more favorable tonality of the news coverage of incumbents. Free press and free elections are temporally decoupled, thus disallowing them to work as effective accountability mechanisms. This secures dictator's power while upholding an image of competence and democratic rule.
    Keywords: Authoritarian government, smart dictatorships, media repression, political election cycles, media tonality
    JEL: D72 H10 P43
    Date: 2023

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