The economic impact of Russia’s invasion of Ukraine on European countries – a SVAR approach
Series
SNB Working Papers; 4/2023
Type
working paper
Date Issued
2023
Author(s)
Abstract
We quantify the economic impact of Russia’s invasion of Ukraine on Germany, the United Kingdom, France, Italy and Switzerland using data on historical geopolitical events. Applying a structural VAR approach based on sign and narrative sign restrictions, we find that the war has exerted a notable drag on real activity and has pushed inflation up considerably. For example, a counterfactual exercise suggests that in Germany, GDP would have been 0.7 percent higher and the CPI 0.4 percent lower in 2022Q4 if Russia had neither attacked nor threatened Ukraine. The negative consequences of the war are likely to be far greater in the medium-to-long term, especially with regard to the real economy.
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Bruhin_et_al_SNBworking_paper_2023_04.n.pdf
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