Commentary The war in Ukraine has emphasized Western Europe’s dependence upon Russian energy exports, and a group of mainstream economists decided to consider what might happen to the German economy if Russia effectively reduced the supply of energy to Germany by 10 percent.
Their conclusion, in a working paper entitled “What if? The macroeconomic and distributional effects for Germany of a stop of energy imports from Russia” (in German, with an English appendix), was comforting: a 10 percent fall in energy would only reduce GDP by one-sixth as much: “economic losses from a -10 percent energy shock could be up to 1.5 percent of German GNE … GNE losses of an embargo on Russian energy are small.” (Bachmann et al. 2022a, pp. 2,8)….