What is the Effect of Economic Sanctions on Economic Growth of Russian Federation (Microeconomic Perspective)?

Abstract

The aim of this research is to study the impact of Western countries’ sanctions imposed on Russia (due to annexation of Crimea) and economic growth from the micro-level perspective. The main problem of the estimation of an effect of sanctions on Russian economy is the coincident drop in oil prices. The focus of this paper is to take the macroeconomic shock (fall in oil prices) into account and study the effect on a firm’s performance. Using a detailed firmspecific data and difference-in-difference research design I find that, on average, sanctions led to a decrease in operating cash flows by 1.381 percent and a decrease in net income of 1.812 percent.