Bearing the cost of politics: Consumer prices and welfare in Russia

In August 2014, the Russian Federation implemented an embargo on select food and agricultural imports from Western countries in response to previously imposed economic sanctions. this paper we quantify effect of consumer prices welfare Russia. We provide evidence for direct monthly with a difference-in-differences approach. The caused embargoed goods rise by up 7.7% – 14.9% short run average 2.6% 8.1% until at least 2016. results further suggest shock was transmitted non-embargoed sectors through domestic input-output linkages. then construct general equilibrium Ricardian model trade linkages that are tradable, non-tradable or embargoed. model-based counterfactual analysis predicts overall price index Russia have increased 0.33% declined 1.84% due embargo.