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Porträttfoto

Joakim Gullstrand

Dean, Professor

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What goes around comes around: The effects of sanctions on Swedish firms in the wake of the Ukraine crisis

Author

  • Joakim Gullstrand

Summary, in English

This study uses the sanctions imposed on and by Russia in 2014 as an exogenous shock on Swedish firms. The results suggest that the total short‐run cost of these sanctions on the Swedish economy amounted to around 1 billion SEK in 2013 prices, which implies a rather limited impact (around 0.025% of the Swedish GDP). The sanction effects were, however, highly asymmetric, and the direct effect on firms exporting banned products to Russia was a 70% drop in exports to Russia and an increased probability of exiting this market with 0.6 units. The indirect effects on nonbanned products were a 36% drop in sales and an increased probability of exiting of around 0.2 units. The disruption on the Russian market also created ripple effects outside this market, which was manifested in a 20% drop in the domestic production of banned products, a 12% drop in sales on markets outside Russia and a new export pattern. These negative ripple effects were also found to be pronounced in firms with their core products exposed to these sanctions, in firms with financial distress and in regions with a relatively low level of labour productivity.

Department/s

  • Department of Economics

Publishing year

2020-06-27

Language

English

Pages

2315-2342

Publication/Series

World Economy

Volume

43

Issue

9

Document type

Journal article

Publisher

Wiley-Blackwell

Topic

  • Economics

Status

Published

ISBN/ISSN/Other

  • ISSN: 1467-9701