Brown Bag SEMinar+ March 30th, 2021
Zoom link: https://us02web.zoom.us/j/89128475893
Meeting ID: 891 2847 5893
16.00 – 17.00 // Research Paper Presentation
Title: How to Simulate International Economic Sanctions: A Multipurpose Index Modelling Illustrated With EU Sanctions Against Russia
Abstract: One of the main challenges that economists must face while studying economic sanctions is to faithfully simulate them in their models. It seems extremely hard to achieve without a dedicated variable that precisely imitates economic coercive measures. Thence, a framework for the construction of economic sanction indexes is introduced. Researchers can use our multipurpose index modelling to simulate economic punishment in their econometric models. If our work is framed within the Ukrainian crisis case and European economic sanctions against Russia, the method that we provide can be used in any other case study. It is a great alternative to the standard use of dummy variables that witness sanctions’ implementation and withdrawal. Additionally, our proposal allows to calibrate the weight attributed to each sanction depending on its type, the sanction sender’s ability to apply economic pressure, and the effect of time on sanctions’ effectiveness. The methodology and the mathematical formalisation of our framework is detailed. It is used to build a sanction index that simulates sanctions against Russia during the Ukrainian crisis. Then, an empirical study that compares our index to another one from the literature is exposed. Results reveal that our new sanction index witnesses the behaviour of sanctions more precisely, which leads to a stronger explanatory power. Moreover, it enhances the statistical significance of impulse-response functions generated by our SVAR models. If time allows, further robustness tests and experimentations will be introduced.
Morad BALI is Assistant Lecturer (ATER) in economics at Sciences Po Grenoble (France). He is researcher at the Laboratory “CESICE” (Center for Studies on International Security and European Cooperation), France. He is also associate researcher at the IRNC (Institute for Research on Non-Violent Conflict Resolution), France. His research focuses on the economic impact of international sanctions.