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Sanctions and the exchange rate

Author

Listed:
  • Itskhoki, Oleg
  • Mukhin, Dmitry
Abstract
Stabilising the exchange rate allows the Russian government to anchor inflation expectations and support consumption but comes at the cost of the financial repression of domestic savers.

Suggested Citation

  • Itskhoki, Oleg & Mukhin, Dmitry, 2022. "Sanctions and the exchange rate," LSE Research Online Documents on Economics 115564, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:115564
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    File URL: http://eprints.lse.ac.uk/115564/
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    References listed on IDEAS

    as
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    3. Engel, Charles & Bianchi, Javier & Bigio, Saki, 2021. "Scrambling for Dollars: International Liquidity, Banks and Exchange Rates," CEPR Discussion Papers 16712, C.E.P.R. Discussion Papers.
    4. Guido Lorenzoni & Iván Werning, 2023. "A Minimalist Model for the Ruble during the Russian Invasion of Ukraine," American Economic Review: Insights, American Economic Association, vol. 5(3), pages 347-356, September.
    5. Mary Amiti & Oleg Itskhoki & Jozef Konings, 2022. "Dominant Currencies: How Firms Choose Currency Invoicing and Why it Matters," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1435-1493.
    6. Xing Guo & Pablo Ottonello & Diego J. Perez, 2023. "Monetary Policy and Redistribution in Open Economies," Journal of Political Economy Macroeconomics, University of Chicago Press, vol. 1(1), pages 191-241.
    7. Oleg Itskhoki & Dmitry Mukhin, 2021. "Exchange Rate Disconnect in General Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 129(8), pages 2183-2232.
    8. Sebastián Fanelli & Ludwig Straub, 2021. "A Theory of Foreign Exchange Interventions [The Cost of Foreign Exchange Intervention: Concepts and Measurement]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(6), pages 2857-2885.
    9. Bianchi, Javier & Sosa-Padilla, César, 2024. "On wars, sanctions, and sovereign default," Journal of Monetary Economics, Elsevier, vol. 141(C), pages 62-70.
    10. Krugman, Paul, 1979. "A Model of Balance-of-Payments Crises," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 11(3), pages 311-325, August.
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    13. Ricardo J. Caballero & Emmanuel Farhi & Pierre-Olivier Gourinchas, 2008. "An Equilibrium Model of "Global Imbalances" and Low Interest Rates," American Economic Review, American Economic Association, vol. 98(1), pages 358-393, March.
    14. Oleg Itskhoki, 2021. "The Story of the Real Exchange Rate," Annual Review of Economics, Annual Reviews, vol. 13(1), pages 423-455, August.
    15. Gourinchas, Pierre-Olivier & Rey, Hélène, 2014. "External Adjustment, Global Imbalances, Valuation Effects," Handbook of International Economics, in: Gopinath, G. & Helpman, . & Rogoff, K. (ed.), Handbook of International Economics, edition 1, volume 4, chapter 0, pages 585-645, Elsevier.
    16. Zhengyang Jiang & Arvind Krishnamurthy & Hanno Lustig, 2018. "Foreign Safe Asset Demand for US Treasurys and the Dollar," AEA Papers and Proceedings, American Economic Association, vol. 108, pages 537-541, May.
    17. Adrien Auclert & Matthew Rognlie & Martin Souchier & Ludwig Straub, 2021. "Exchange Rates and Monetary Policy with Heterogeneous Agents: Sizing up the Real Income Channel," NBER Working Papers 28872, National Bureau of Economic Research, Inc.
    18. Blanchard, Olivier J, 1985. "Debt, Deficits, and Finite Horizons," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 223-247, April.
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    Citations

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    Cited by:

    1. Stanislav Yugay & Linde Götz & Miranda Svanidze, 2024. "Impact of the Ruble exchange rate regime and Russia's war in Ukraine on wheat prices in Russia," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 384-411, March.
    2. Yagi, Michiyuki & Managi, Shunsuke, 2023. "The spillover effects of rising energy prices following 2022 Russian invasion of Ukraine," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 680-695.
    3. Hayakawa,Kazunobu & Kumagai,Satoru, 2024. "Trade Effects of the Russia–Ukraine Conflict: Can Neutral Countries Really Fish in Troubled Waters?," IDE Discussion Papers 944, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Maria S. Lymar & Alexander A. Reentovich & Andrey A. Sinyakov, 2024. "A commodity exporting economy under financial and trade restrictions: Aggregate and structural changes," Russian Journal of Economics, ARPHA Platform, vol. 10(2), pages 103-129, July.
    5. Simon P. Lloyd & Emile A. Marin, 2023. "Capital Controls and Free-Trade Agreements," Discussion Papers 2306, Centre for Macroeconomics (CFM).
    6. Lastauskas, Povilas & Proškutė, Aurelija & Žaldokas, Alminas, 2023. "How do firms adjust when trade stops?," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 287-307.
    7. Oleg Itskhoki, 2022. "Comment on "Excess Savings and Twin Deficits: The Transmission of Fiscal Stimulus in Open Economies"," NBER Chapters, in: NBER Macroeconomics Annual 2022, volume 37, pages 413-422, National Bureau of Economic Research, Inc.
    8. Klose, Jens, 2024. "Empirical effects of sanctions and support measures on stock prices and exchange rates in the Russia–Ukraine war," Global Finance Journal, Elsevier, vol. 59(C).
    9. Fetzer, Thiemo & Palmou, Christina & Schneebacher, Jakob, 2024. "How do firms cope with economic shocks in real time?," CAGE Online Working Paper Series 722, Competitive Advantage in the Global Economy (CAGE).
    10. Haishi Li & Zhi Li & Ziho Park & Yulin Wang & Jing Wu, 2024. "To Comply or Not to Comply: Understanding Neutral Country Supply Chain Responses to Russian Sanctions," CESifo Working Paper Series 11110, CESifo.
    11. Bianchi, Javier & Sosa-Padilla, César, 2024. "On wars, sanctions, and sovereign default," Journal of Monetary Economics, Elsevier, vol. 141(C), pages 62-70.
    12. Thiemo Fetzer & Christina Palmou & Jakob Schneebacher, 2024. "How Do Firms Cope with Economic Shocks in Real Time?," ECONtribute Discussion Papers Series 337, University of Bonn and University of Cologne, Germany.
    13. Gustavo de Souza & Naiyuan Hu & Haishi Li & Yuan Mei, 2022. "(Trade) War and Peace: How to Impose International Trade Sanctions," Working Paper Series WP 2022-49, Federal Reserve Bank of Chicago.
    14. Hayakawa,Kazunobu & Kumagai,Satoru, 2022. "The trade effect of economic sanctions: evidence from the 2022 Russia-Ukraine conflict," IDE Discussion Papers 857, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    15. Thiemo Fetzer & Christina Palmou & Jakob Schneebacher, 2024. "How Do Firms Cope with Economic Shocks in Real Time?," CESifo Working Paper Series 11367, CESifo.
    16. Dmitry Matveev & Francisco Ruge-Murcia, 2024. "Tariffs and the Exchange Rate: Evidence from Twitter," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 72(3), pages 1185-1211, September.
    17. Becko, John Sturm, 2024. "A theory of economic sanctions as terms-of-trade manipulation," Journal of International Economics, Elsevier, vol. 150(C).
    18. Antoine Berthou, 2023. "International sanctions and the dollar: Evidence from trade invoicing," Working papers 924, Banque de France.
    19. Gustavo de Souza & Naiyuan Hu & Haishi Li & Yuan Mei, 2023. "(Trade) War and Peace: How to Impose International Trade Sanctions," CESifo Working Paper Series 10477, CESifo.
    20. Bossman, Ahmed & Gubareva, Mariya & Teplova, Tamara, 2023. "Asymmetric effects of geopolitical risk on major currencies: Russia-Ukraine tensions," Finance Research Letters, Elsevier, vol. 51(C).
    21. Fetzer, Thiemo & Palmou, Christina & Schneebacher, Jakob, 2024. "How do firms cope with economic shocks in real time?," The Warwick Economics Research Paper Series (TWERPS) 1517, University of Warwick, Department of Economics.

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    More about this item

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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