THE EFFECT OF WESTERN SANCTIONS ON THE RUSSIAN GDP PER CAPITA: A SYNTHETICAL CONTROL APPROACH

This work examines the casual effect of the 2022 western sanctions against Russia, due the invasion of Ukraine, on GDP per Capita using the synthetic control method. In general, the use of sanctions, as a foreign policy tool, rose remarkably during the end of the great financial crises of 2007/2008 and it finds more attention by researchers as well as politicians. In the context of the Ukraine conflict Russia already had to face a package of sanctions in 2014 due the Krim anexion. In the literature there are already a few papers that investigate the effects of these but regarding the more severe sanctions of 2022 there almost no existing literature. Thus, we aim with this early approach to contribute to a clearer view of the effect on the economy. We use the synthetic control as described in the literature and conduct robustness tests to verify our estimations. However, we found an overall negative effect in the period of 2022-2025 which includes estimations of the IMF World Economic Outlook. Our robustness analysis indicates a statistically significant effect in the first year after imposing the sanctions but not for the following years.