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Is Russia going to be affected by how the world reacts when it invades Ukraine?

At the IGM Forum at Chicago Booth, some of the best economists from Europe and the United States were invited to speak. Because of the economic and financial sanctions that have been put in place, most people think that Russia will go into a deep recession. Many also think that the invasion will hurt the global economy and inflation over the next year. European countries would go into recession, but most people polled say that an embargo on Russian oil and gas would be worth the money if that were the case. People have a wide range of opinions when asked about the impact of dollar finance being used as a weapon on its status as the world’s most important currency.

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Russia is cutting back on the amount of fossil fuel it exports: short-term pain for long-term gain

What are the most likely economic consequences following Russia’s attack on Ukraine? Over the last ten years, the IGM Forum at Chicago Booth has asked some of the world’s best economic experts from Europe and the United States to give their thoughts on current public policy issues. As part of this year’s IGM Forum, the panelists were asked to share their thoughts on several important topics, such as how the Russian economy (Cecchetti and Schoenholtz 2022, Garicano 2022), Europe’s economy, the role of the U.S. dollar as a global currency, and more,

 

In the immediate aftermath of Russia’s invasion of Ukraine, global growth will slow down, and inflation will rise, which will lead to a stagflationary spiral that will hurt everyone.

There were 41 of the 48 European experts and 40 of the 43 American experts who took part in this poll, with 81 expert votes.

 

Depending on how the invasion goes, it could cause stagflation.

A majority of the panel thinks that the invasion will hurt global economic growth and inflation over the next year. The rest aren’t sure.

 

Sixty-five percent of people in the U.S. said they agreed with the survey results, 16 percent said they agreed with them very much, and 19 percent said they didn’t know. Some 34 percent of the European panel say they agree, 44 percent agree, 22 percent aren’t sure, and 0 percent disagree or strongly disagree (again, this is based on each expert’s confidence in their answer).

Overall, 26 percent strongly agree, 53 percent agree, 21 percent aren’t sure, and no one disagrees with this statement. This statement is true for everyone.As a student at University College Dublin, Karl Whelan says this is a “classic” lousy supply shock. As we learned in the 1970s, these shocks raised inflation and cut output. A nasty supply shock is what Robert Shimer of the University of Chicago is calling it, even though he doesn’t know what will happen. That could or could not be inflationary, depending on how the monetary policy responds. Yale’s Larry Samuelson, who agrees with the statement, says that a protracted fight will hurt the global economy, on top of problems with the supply chain.

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