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Category: Allgemein

Will sanctions on Russia work?

In a recent TV interview I have given the Swiss channel Tele Z, I had a chance to discuss with my host Claudia Steinmann the implications of sanctions for the Russian and western economies. We also talked about whether or not China is going to benefit from the situation. In this post, I follow up on my interview and elaborate a little more on whether sanctions will work or not. In the next post, I plan to write a little more on how I see the role of China.

Will sanctions work, then? I think, it is important to answer that question at three levels: macroeconomic, political, military-strategic. And at the three levels the respective answer is “yes”, “it depends” and “probably not”. But then there is another level — bear with me….

  • Take the macroeconomic level first. Sanctions are already having a devastating effect on the Russian economy. The bulk of foreign currency reserves has been seized, the ruble has tumbled, domestic inflation is soaring, trade has collapsed, production come to a standstill in many parts of the economy. This is hurting the regime, but it is hurting the average Russian even more. While “oligarchs” have been targeted by the seizure of their overseas assets, the overall effect of the sanctions is clearly much smaller for oligarchs than for the average Russian household. Oligarchs are people with international networks and globally diversified asset portfolios, including access to countries that do not implement any sanctions (the yachts are starting to show up in Turkey already…). Such asset shifting is not really an option for the average Russian, though. Hence, if anything the West should work harder on actually implementing and extending the sanctions on the oligarchs. Actually seizing their assets would be a start, implementation in many countries (including Switzerland, Germany…) is patchy at best so far.

Globalization of Real Estate Network

Mathias Hoffmann is the Scientific Director of a new research network “Globalization of Real Estate Markets” (GREN) at the UZH Center for Urban and Real Estate Management. The objective of the network is to provide an international forum for economic research that examines how the forces of globalization shape housing markets around the world.   To this end, the network collects and aggregates data on international real estate markets and organizes academic conferences,  summer schools and policy events.

China’s role in the global financial crisis

On Nov 29th, I gave a public lecture on China’s role in the origins and the handling of the financial crisis as part of a lecture series commemorating the 10th anniversary of the global financial crisis.

Building on my research with Iryna Stewen and Yi Huang, I argue that global imbalances were an important factor in the run-up of the crisis. But the crisis was ultimately caused by U.S.specific factors (lax supervision, political pressure to increase home ownership, weak incentives for proper screening).

During the crisis, China reacted with a massive fiscal expansion. This contributed to stabilizing global demand but it also exacerbated the misallocation of capital within China.

The lecture slides are available here (password protected — send me an e-mail for access)