Trade Decoupling from Russia

34 Pages Posted: 20 Sep 2022 Last revised: 19 Apr 2023

See all articles by Alessandro Borin

Alessandro Borin

Bank of Italy

Francesco Paolo Conteduca

Bank of Italy

Enrica Di Stefano

Bank of Italy

Vanessa Gunnella

European Central Bank (ECB)

Michele Mancini

Bank of Italy

Ludovic Panon

Bank of Italy

Date Written: June 20, 2022

Abstract

We use a general equilibrium trade model to quantify the welfare cost of decoupling from Russia. We find that a doubling of non-tariff barriers imposed by the West on Russian imports and exports of all goods would decrease Russian welfare by 4.8% and would have a relatively small effect on Western welfare. We show that the welfare cost of decoupling is amplified by supply chains and that restrictions on Russian energy, especially oil, matter quantitatively. Finally, we find that welfare losses generated by restrictions actually applied by the West in the aftermath of the 2022 Russian invasion of Ukraine account for around 80% of those obtained in our decoupling scenario.

Keywords: Decoupling, Trade restrictions, Energy, International trade, Global value chains

JEL Classification: F02, F11, F15, F17

Suggested Citation

Borin, Alessandro and Conteduca, Francesco Paolo and Di Stefano, Enrica and Gunnella, Vanessa and Mancini, Michele and Panon, Ludovic, Trade Decoupling from Russia (June 20, 2022). Bank of Italy Occasional Paper No. 700, Available at SSRN: https://ssrn.com/abstract=4223361 or http://dx.doi.org/10.2139/ssrn.4223361

Alessandro Borin

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Francesco Paolo Conteduca (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

HOME PAGE: http://fpconteduca.com

Enrica Di Stefano

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Vanessa Gunnella

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

Michele Mancini

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Ludovic Panon

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

HOME PAGE: http://https://sites.google.com/site/ludovicpanon/

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