Supporting Ukraine: More critical than ever

Edited by Yuriy Gorodnichenko and Vladyslav RashkovanSupporting Ukraine: More critical than ever Supporting Ukraine: More critical than everWITH SUPPORT OF CEPR PARIS FOUNDING PARTNERS CEPR PRESSCentre for Economic Policy Research33 Great Sutton StreetLondon, EC1V 0DX, UK187 boulevard Saint-Germain75007, Paris, FranceTel: +44 (0)20 7183 8801Email: cepr@cepr.orgWeb: www.cepr.org ISBN: 978-1-912179-70-1Copyright © CEPR Press, 2023 Supporting Ukraine: More critical than everEdited by Yuriy Gorodnichenko and Vladyslav Rashkovan CENTRE FOR ECONOMIC POLICY RESEARCH (CEPR)The Centre for Economic Policy Research (CEPR) is a network of over 1,700 research economists based mostly in European universities. The Centre’s goal is twofold: to promote world-class research, and to get the policy-relevant results into the hands of key decision-makers. CEPR’s guiding principle is ‘Research excellence with policy relevance’. It was founded in the UK in 1983, where it is a Charity, and in November 2019 CEPR initiated the creation of an Association under French law, in order to provide a vehicle for an expansion in France. The members of the Conseil d’Administration of the Association are identical to the UK Board of Trustees.CEPR is independent of all public and private interest groups. It takes no institutional stand on economic policy matters and its core funding comes from its Institutional Members, projects that it runs and sales of publications. Because it draws on such a large network of researchers, its output reflects a broad spectrum of individual viewpoints as well as perspectives drawn from civil society. CEPR research may include views on policy, but the Trustees/members of the Conseil d’Administration of the Association do not give prior review to its publications. The opinions expressed in this report are those of the authors and not those of CEPR.Chair of the Board Sir Charlie BeanFounder and Honorary President Richard PortesPresident Beatrice Weder di MauroVice Presidents Maristella Botticini Philippe Martin Ugo Panizza Mar Reguant Hélène ReyChief Executive Officer Tessa Ogden ContentsIntroduction 1Yuriy Gorodnichenko and Vladyslav Rashkovan1 Why helping Ukraine helps all humanity 3Andriy Pyshnyy2 Democracy needs Ukraine to win 7Daron Acemoglu and Simon Johnson3 Helping Ukraine is not only crucial for peace in Europe but also for world peace 13Gérard Roland4 The fiscal case for Europe to ‘go Dutch’ on defence 17Hanno Lustig5 The peace dividend can be saved in Ukraine 23Yuriy Gorodnichenko6 Observing freedom’s vanishing act 27Noam Yuchtman7 Why it is imperative to help Ukraine 31Sergei Guriev8 How Ukraine can finish the unfinished transition agenda 35Torbjörn Becker9 Russia’s imperial war and the need for assistance to Ukraine during and after the war 41Jan Svejnar10 Why the world needs Ukraine as much as Ukraine needs the world 45Harold James11 Ukraine has finally started to exist on Germany’s map 49Klaus Adam12 Ukraine is the latest Guernica. Let’s make it the last 53Maurice Obstfeld13 Why does Ukraine matter so much to me? 57Charles Wyplosz14 Why the West must not waiver in its support for Ukraine: Three critical issues 61Adonis Yatchew15 Why Ukraine must be given full support 65Anders Åslund 16 Supporting Ukraine with sanctions has been much less costly than many predicted – we should do more of it 69Benjamin Moll17 Why it is imperative to help Ukraine 75Rüdiger Bachmann18 Postwar reconstruction assistance and local governments in Ukraine 81Roger Myerson19 Why central banks around the world should be interested in Ukraine’s victory 85Sergiy Nikolaychuk20 The all-out aggression requires an all-out response 89Oleksiy Blinov and Simeon Djankov21 The Russian invasion and the risks to global financial stability 95Stephen G. Cecchetti and Kermit L. Schoenholtz22 Why the West needs Ukraine and its IT business 101Monika Schnitzer23 Latin America’s duty to stand with Ukraine 105Vanessa Rubio-Márquez and Francisco Varela Sandoval24 From local regions in the EU to those in Ukraine (and back again): How FDI and global value chains tie our local economies together 111Riccardo Crescenzi and Oliver Harman25 Trade, war, and reconstruction 117Philippe Martin, Thierry Mayer and Mathias Thoenig26 Why the West should help Ukraine win: The economic arguments 121Basil Kalymon27 Ukraine deserves what others of us in Eastern Europe got – the EU 125Wojciech Kopczuk28 Foreign support to Ukraine: Evidence from a database of military, financial, and humanitarian aid 129Christoph Trebesch29 Ethics and enlightened self-interest pointing towards standing with Ukraine 147Refet S. Gürkaynak30 The West ben