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We examine Russian imports since a coalition of countries imposed sanctions on exports to Russia. As Russia no longer publishes detailed statistics on foreign trade, we rely on export data from its largest trading partners (mirror statistics). We are particularly interested in trade diversion, i.e. the extent to which Russian imports have shifted from sanctioning countries to other countries. Our analysis is based on monthly export data and focuses on technology goods (HS codes 84 and 85) utilizing a difference-in-difference approach. Our dataset covers exports to Russia at the HS6-level of disaggregation from 26 sanctioning and 14 non-sanctioning countries during 2018-2023. We find that the exports of sanctioning countries to Russia fell drastically overall, with exports of sanctioned goods declining more than average exports. On the other hand, the export of sanctioned goods to Russia by non-sanctioning countries have risen more than their overall exports, indicating that Russia has managed to replace some goods no longer available from sanctioning countries, but not all of them. [ABSTRACT FROM AUTHOR]

This brief presents an overview of Ukraine's economy before and during the first ten months of the Russo-Ukraine war, as well as some preliminary considerations for the post-war economy. Although Ukraine's economic growth trailed many of its peers in the years leading up the invasion, the country possesses certain economic and institutional strengths over most countries at a similar level of development. While these strengths should make reconstruction less difficult, the situation remains fraught with difficulties. Many of the activities that make the largest economic contributions, particularly to exports, take place in the eastern regions of Ukraine or in the Kyiv capital region. These areas have either been temporarily occupied by Russia or face a greater military threat by Russia than the poorer, more peaceful, western parts of the country. The country's public finances are deeply in deficit, so restoring strong export revenues is critical to Ukraine's economic recovery. As long as the war continues, Ukraine's public finances and military efforts must largely be financed by foreign partners. [ABSTRACT FROM AUTHOR]

In this note, we review recent data concerning Russia's economic integration with other countries. We first analyze the general picture of Russia's economic integration with the rest of the world and the importance of foreign economic relations for the country. We then turn to China, an increasingly significant economic partner for Russia. The European Union remains Russia's most important trading partner and is by far the most important source of foreign direct investment to Russia as well as source of other financing. China's importance to Russia has also increased, especially with respect to merchandise trade. [ABSTRACT FROM AUTHOR]

Optimum currency areas and the influence of business cycles on currency rates is analyzed by focusing on the performance of Euro in Central and Eastern European Countries.

We assess the correlation of supply and demand shocks between current countries in the euro area and European Union (EU) accession candidates from 1993/1995 to 2002. Supply and demand shocks are recovered from estimated structural vector autoregressive models of output growth and inflation. Notably, the economic slowdown between 2000 and 2002 increased heterogeneity of business cycles between the euro area and acceding counties. We find that several acceding countries have a quite high correlation of underlying shocks with the euro area and conclude that continuing integration within the EU is likely to align the business cycles of these countries in a manner similar to the synchronisation of supply and demand shocks that we document for the EU in the 1990s. Comparative Economic Studies (2004) 46, 45-62. doi:10.1057/patgrave.ces.8100040 Keywords: optimum currency area, EU enlargement, structural VAR JEL Classification: E32, F42, INTRODUCTION Soon after they accede to the European Union (EU) in 2004, the new member states will have to consider their timetables for joining Economic and Monetary Union (EMU). Adoption [...]

A Finnish economist assesses the economic transition experience of the three Baltic countries--Estonia, Latvia, and Lithuania--the first among the successor states of former Soviet Union (FSU) to liberalize and stabilize their economies. He investigates the extent to which progress in transition reflects favorable initial conditions in the Baltic states vis-a-vis implementation of stable macroeconomic policies and ongoing structural reform. The paper argues that the pronounced break with the past after these countries regained their independence facilitated efforts to steer the reform process in a more radical direction, with the prospect of EU membership providing an added incentive to continue painful structural reforms. Journal of Economic Literature, Classification Numbers: E6, P2, P3.4 figures, 2 tables, 53 references.

This paper updates my earlier calculations on Russia's long-run growth potential using a standard growth accounting framework in which GDP growth depends on available labor, capital and efficiency in combining them, i.e. total factor productivity. Russia's economy has grown relatively slowly during the past decade, partly because of declining labor force. In my revised framework, growth recovers after the negative COVID-19 shock, but remains subdued as the working-age population continues to dwindle. Productivity growth remains lower than in the early 2000s, while average GDP growth settles at approximately 1.5% p.a. [ABSTRACT FROM AUTHOR]

In this note, I review the literature on the economic effects of sanctions against Russia and Russia's counter-sanctions. As a general observation, studies of the macroeconomic effects of sanctions on Russia and their effects on international trade and financial flows must deal with the nearly concurrent oil price collapse at the introduction of sanctions. Most papers support the view that sanctions have worked as planned, noting the drag they have imposed on Russia's general economic development since 2014. This adverse effect most likely operates by depressing both foreign trade and foreign capital flows into Russia. Russia's own counter-sanctions have also had a clear negative effect on the welfare of the average Russian household. [ABSTRACT FROM AUTHOR]

This introductory essay explores some of the key issues in China's economic reforms during the past 40 years. Reforms and liberalization have progressed unevenly, but generally the trend has been towards more market-oriented economic system. However, the primacy of Chinese Communist Party has never been seriously challenged. China's membership in the World Trade Organization has fostered much deeper integration with the rest of the global economy, and therefore effects of China's reforms have spread to other countries as well. In the recent years China's reform drive seems have faltered. Also, demographic trends have turned, and working-age population is declining. These developments together may mean clearly lower growth going forward. [ABSTRACT FROM AUTHOR]

The result points to the aforementioned dilemma faced by the Chinese authorities: further substantial RMB internationalisation might demand capital movement liberalisation, but such a move would make the RMB markets, broadly understood, more susceptible to foreign shocks, both economic and potentially political. In any case, the use of the RMB as an international payment currency and the stock of outstanding RMB assets in the international capital markets continue to lag behind China's presence in the overall world economy. This special section, edited by Yin-Wong Cheung and Iikka Korhonen, assesses the long and complex process of the renminbi (RMB) internationalisation from several different angles. [Extracted from the article]

Abstract: We review previous research on China's business cycle correlation with other economies applying meta‐analysis. We survey 71 papers analysing the different periods of Chinese economic development since the 1950s that were published in English or Chinese. We confirm that Pacific Rim economies in particular have relatively high business cycle correlation with China. It appears that many characteristics of the studies and authors influence the reported degree of business cycle synchronization. For instance, Chinese‐language papers report higher correlation coefficients. Despite this, we do not detect robust evidence for publication bias in the papers. Moreover, we show that the broad evidence does not confirm the popular decoupling hypothesis. [ABSTRACT FROM AUTHOR]

This note briefly reviews the history and current impacts of sanctions on Russian entities imposed by the EU, US and others, as well as Russia's counter-sanctions imposed on Western countries. A large drop in price of oil in 2014 and 2015 coincided with these measures, complicating our efforts to tease out the specific economic effects of sanctions on the Russian economy. While it is clear that the decline in oil prices had a substantially larger impact on Russian GDP in 2014-2016 than sanctions, the sanctions regime proved effective in restricting access of Russian banks to capital. Looking specifically the impacts on EU countries, we note that the declines in trade with Russia and the EU's reduced market share in Russia are to some extent continuations of long-term trends. Russia's counter-sanctions have targeted, among other things, EU food exports to Russia. While the macroeconomic effects Russia's counter-sanctions on the EU have been marginal, food sector in some EU countries has been affected. Russia's counter-sanctions have also directly lowered consumption of affected goods in Russia. [ABSTRACT FROM AUTHOR]

In emerging market economies, transmission of monetary policy through the foreign exchange market is complicated by the coexistence of financial restrictions and arbitrages. Using China as an example, we show that the coexistence of exchange rate interventions, capital controls and an onshore- offshore exchange rate differential makes the long run equilibrium in the currency market nonlinear. Disturbances to this nonlinear long run equilibrium could offset the impact of monetary policy actions on domestic price stability. Omitting such nonlinearity leads to biased inference on the effectiveness of monetary policy. [ABSTRACT FROM AUTHOR]

In this paper, we provide an analysis of various interest groups in trying to affect the exchange rate determination and the direction of exchange rate policies in China. Given that the People's Bank of China is not an independent central bank, additional actors such as the Ministry of Commerce (MOFCOM), Ministry of Finance (MOF), the National Development and Reform Commission (NDRC), the State-Owned Assets Supervision and Administration Commission (SASAC) all have incentives to influence the Politburo Standing Committee (PBSC) as well as the relevant Leading Small Groups (LSGs). To enrich the discussions on the political and institutional aspects of the yuan, we also provide an economic lobbying model incorporating imperfectly competitive tradable sectors to shed light on our unique case of Chinese currency determination and exchange rate policy in the presence of these interest groups. [ABSTRACT FROM AUTHOR]

Copyright of BOFIT Policy Brief is the property of Bank of Finland Institute for Emerging Economies (BOFIT) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

In this note I gauge Russia's future growth potential under various assumptions in a standard growthaccounting framework. Russia's GDP growth during the next two decades will be substantially lower than during the previous 15 years, mostly because of rapid decline in labor force. In addition, much of the potential for rapid productivity growth has already been exhausted. Russia's GDP growth will be below two per cent per annum. [ABSTRACT FROM AUTHOR]

Copyright of BOFIT Policy Brief is the property of Bank of Finland Institute for Emerging Economies (BOFIT) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The paper investigates the determinants of geographical distribution of international currencies in global financial market transactions. We implement a gravity model, in which international currency distribution depends on the characteristics of the source and destination countries. We find that the source country's currency is more likely to be used in the financial market transactions of the destination country if the bilateral trade and capital flows are large or the destination country's economy is the larger of the two. We also find that the level of development of the destination country's financial market and whether the two countries use a common language are important determinants of the currency distribution. In addition, our model suggests that, to be a true international currency, the renminbi should be used more extensively in the financial markets of the US and UK. [ABSTRACT FROM AUTHOR]

We summarize previous research on China's business cycle correlation with other countries with the help of meta-analysis techniques. We survey 71 related papers along with all the characteristics of the estimations as well as those of the authors. We confirm that especially Pacific Rim countries have relatively high business cycle correlation with China. However, it appears that many characteristics of the studies and authors do influence the reported degree of business cycle synchronization. For instance, Chinese-language papers report higher correlation coefficients. Despite of this, we do not detect a robust publication bias in the papers. [ABSTRACT FROM AUTHOR]

We employ a wavelet spectrum analysis to study globalization and business cycles in China and G7 countries. The co-movement synchronization between G7 countries and China is shown to have undergone frequent and large changes during our sample period. The co-movements for business-cycle frequencies are generally different from those for other frequencies. We find a significant relationship between the time-varying wavelet measure of synchronization and trade only for business-cycle frequencies. The co-movements at longer frequencies are negatively related to trade, so that the overall co-movements and trade tend not to be significantly related. [ABSTRACT FROM AUTHOR]

Copyright of BOFIT Online is the property of Bank of Finland Institute for Emerging Economies (BOFIT) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper describes the main characteristics of Ukraine's banking sector in the current difficult political and economic situation. We include shifts in the banking sector's size and structure since the 2008 global financial crisis, a brief assessment of Ukraine's fragile macroeconomic situation, and commentary on recent developments in the banking sector. [ABSTRACT FROM AUTHOR]

We employ a wavelet spectrum analysis to study globalization and business cycles in China and G7 countries. The co-movement synchronization between G7 countries and China is shown to have undergone frequent and large changes during our sample period. The co-movements for business cycle frequencies are generally different from those for other frequencies, and synchronization with China's business cycle differs as between G7 countries. In recent years Japan, Germany and Italy seem to have the closest synchronization at business-cycle frequency. We find a significant relationship between the time-varying wavelet measure of synchronization and trade only for business-cycle frequencies. The co-movements at longer frequencies are negatively related to trade, so that the overall co-movements and trade tend not to be significantly related. [ABSTRACT FROM AUTHOR]

Copyright of BOFIT Online is the property of Bank of Finland Institute for Emerging Economies (BOFIT) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This paper studies empirically the role of China in the world economy. We examine both the way the Chinese economy reacts to exchange rate shocks and the repercussions for the world economy of an output shock emanating from China. Based on a global vector autoregressive model and a new data set that excels in country coverage and covers the most recent time period including the global financial crisis, our results are threefold: First, we show that a +1% shock to Chinese output translates to a permanent increase of 1.1% in Chinese real GDP and a 0.1% to 0.5% rise in output for most large economies. Second, to benchmark the shock to Chinese output, we examine the response to a +1% shock to US GDP. The results show that the US economy remains dominant in the world economy, as output rises in other advanced economies by 0.6 to 1%. By contrast, China seems to be little affected by the US shock. Finally, we are the first to assess the impact of a real appreciation of the renminbi versus the US dollar in a global model. Our results indicate that real appreciation of the renminbi decreases the level of Chinese GDP slightly and the long-run effect is also negative for many countries exporting (e.g. raw materials) to China. [ABSTRACT FROM AUTHOR]

In this paper we assess the rationality and goodness-of-fit of macroeconomic forecasts for 21 large emerging market countries during the past two decades. We find that in some countries forecasts have not been rational in the sense that they seem to have a systematic bias. We also find that for both GDP growth and inflation the forecast errors are larger for more volatile economies. For some countries GDP and inflation forecast errors have positive correlation, which is consistent with New Keynesian macro-models, whereas for other countries this is not the case. Our results suggest that relying on any one forecast methodology is not prudent. [ABSTRACT FROM AUTHOR]

Copyright of BOFIT Online is the property of Bank of Finland Institute for Emerging Economies (BOFIT) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

Copyright of BOFIT Online is the property of Bank of Finland Institute for Emerging Economies (BOFIT) and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

The article discusses the importance of local and global news in extracting a global stochastic trend on daily stock market index returns of stock exchanges. The importance of local news was measured as the ratio of the local-part variance of the index return to total variance of the index return. Findings show that local news is important for emerging markets, like Russia and India, but its importance is relatively small for the U.S., Great Britain and Germany.