Siow Yue Chia: This is an interesting, topical, and innovative paper.

Benzell and Lagarda study the welfare impact of extreme sanctions on Russia. There have been many studies on the impact of sanctions. Benzell and Lagarda claim their study is different in several aspects.

First, they show the demographic and fiscal transitions of Russia under free trade and autarky by using a large-scale six-region (United States, EU, Russia, China, India, and Japan+South Korea) overlapping-generations (OLG) model with productivity growth, demographic change, region-specific policies, and an energy sector. Each country has 90 generations and two income classes of agents. Their model takes into account interconnected demographic and fiscal transitions.

Second, sanctions are assumed to relegate Russia to autarky in a scenario of much lower oil prices. They investigate sanctions under a variety of scenarios. To keep public finances sustainable over time, income and consumption taxes are assumed to increase.


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