The War in Europe: Economic Costs of the Ukrainian Conflict

31 Pages Posted: 22 May 2019

See all articles by Julia Bluszcz

Julia Bluszcz

Humboldt University of Berlin

Marica Valente

German Institute for Economic Research (DIW Berlin)

Date Written: May 2019

Abstract

With more than ten thousand casualties, the 2014 Ukrainian war between pro-Russian separatists and the government in the Donbass region, Ukraine's productive core, has taken a severe toll on the country. Using cross-country panel data over the period 1995-2017, this paper quantifies the short-term causal effects of the Donbass war on Ukraine's GDP. Results from the counterfactual estimation by the synthetic control method show that Ukraine's per capita GDP foregone due to the war amounts to 15.1% on average for 2013-2017. Separate analysis for the affected provinces of Donetsk and Luhansk indicate an average causal effect of 43% for 2013-2016. Confoundedness checks obtained by iteratively estimating synthetic controls on the pre-war period to account for previous Ukrainian-Russian disputes show robustness of the results.

Keywords: conflict, economic costs, Donbass, synthetic control

JEL Classification: D74, P16, C21, G14

Suggested Citation

Bluszcz, Julia and Valente, Marica, The War in Europe: Economic Costs of the Ukrainian Conflict (May 2019). DIW Berlin Discussion Paper No. 1804 (2019). Available at SSRN: https://ssrn.com/abstract=3392199 or http://dx.doi.org/10.2139/ssrn.3392199

Julia Bluszcz

Humboldt University of Berlin ( email )

Unter den Linden 6
Berlin, AK Berlin 10099
Germany

Marica Valente (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

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