CEPR: “Macroeconomic Policies for Wartime Ukraine”

An e-book with contributions by Torbjörn Becker, Barry Eichengreen, Yuriy Gorodnichenko,  Sergei Guriev, Simon Johnson, Tymofiy Mylovanov, Maurice Obstfeld, Kenneth Rogoff, and Beatrice Weder di Mauro.

First, here’s some data for context.

Source: Institute for the Study of War, accessed 21.August.2022.


Figure 1: Ukrainian GDP growth, y/y, %. 

Figure 2: Ukrainian CPI inflation, y/y, %.

Figure 3: Ukrainian Hryvnia per USD, monthly average of daily data. 

Figure 4: Ukrainian budget balance to GDP, %. 

Figure 5: Ukrainian M0 (money base), millions UAH.


From the executive summary to the book:

For over 160 days, Ukraine has been resisting Russian aggression. A prolonged war is increasingly likely, a prospect that calls for a recalibration of the country’s macroeconomic strategy. Specifically, the current policy mix, which relies on running down foreign reserves and other temporary measures, is progressively untenable. Unless altered, this course will result in a major economic crisis that will cripple Ukraine’s ability to sustain its war effort over
an extended period. This report outlines macroeconomic policies to put the economy on a sustainable trajectory for the duration of the war.

Our recommendations build on four key elements.

First, the government must mobilise more resources to improve its fiscal position so that the country can fund huge military expenditures and maintain basic public services in an economy ravaged by the war. The aim should be to increase the collection of tax revenues and for remaining shortfalls to be financed primarily through nonmonetary means: preferably through external aid, but if not, through domestic debt issuance, …

Second, there is an urgent need for a durable nominal anchor. … In coordination with fiscal authorities, the central bank should implement a flexible framework to support macroeconomic stability. A managed float of the exchange rate is consistent with this goal.

Third, external imbalances should be addressed through a combination of strict capital outflow controls, restrictions on imports, and some flexibility in the exchange rate to avoid jeopardising internal macroeconomic stability in the face of huge fiscal needs. A comprehensive standstill on external debt payments is essential.

Fourth, although wartime governments usually take over the allocation of resources, Ukrainian circumstances call for more market-based allocation mechanisms to ensure cost-effective solutions that do not overburden the state capacity, exacerbate existing problems (such as corruption), or encourage (untaxed) black market activities. …


47 thoughts on “CEPR: “Macroeconomic Policies for Wartime Ukraine”

  1. Macroduck

    Off topic –

    A deal on Iran’s nuclear program is imminent, or not, depending on who is talking. In any case, European participants and Iran apparently have a deal:


    If so, and if the Biden administration agrees (which seems likely), the Congress has 30 days to vote the deal down:


    Maybe those 30 days account for the difference of opinion over “imminent”.

  2. Barkley Rosser

    On the main topic, this is an important post, Menzie, with a serious bunch of people behind this report. Their arguments look reasonable.

    There has been relatively little discussion of how badly this war is damaging the Ukrainian economy. There has been a lot on how sanctions have hurt the much larger Russian economy, but not much on the Ukrainian economy, which is clearly taking a huge hit from all this. Indeed, as the war drags on, the problem of the Ukrainians managing their macroeconomy will become more and more difficult. They will obviously need various forms of outside help, a couple of which are mentioned in the post, such as suspending foreign debt payments.

    1. Ivan

      Both the military and the economy of Ukraine is dependent on EU for survival. The good news is that EU is looking at Ukraine as essential for their own security. They need Russias nose bloodied so hard it will completely destroy the Russian hard core right delusions of a “Rusky Mir”. The ambitions of a large dominant empire is particularly dangerous when it infest a relatively small economy with ICBMs and nuclear warheads. Everybody in Europe understand that those ambitions have to be completely discredited in the wast majority of the Russian population – for the sake of safety in Europe and elsewhere. It will likely take a couple of years of serious hardship in Russia before most people snap out of the “they are all ganging up on us” unity and ask the real question of “why the heck are we doing this, when Ukraine clearly don’t want to be part of Russia”. During those couple of years the same kind of stalemate war that was in Donbass since 2014 will continue in the much larger area now suffering from each side lopping explosions at each other. Given the final price of reducing the Russian threat to a joke, both Europe and US will be more than happy to provide 0.1% of their GDP in military support and maybe twice of that as economic and rebuilding support after the final compromise and end of armed hostilities. After the peace, a well-armed Ukraine would be the perfect replacement for the “cheep labor, reliable supplier” that China used to be. Ukraine is perfectly situated to send trainloads of cheep shit out all over Europe.

      1. Anonymous

        reports big eu stopped ‘aid’ in July, someone can post what they are sending.

        somewhere I saw ukr govt needs $5 to 7 billion a month. Biden’s billion or so a week seems inadequate.

        a bit cheaper than Afghanistan

        but going to the same outcome, us Allie’s not able to go to the mats with the enemy

        the continuous reports of long range duels is totally uninspiring for Kiev advancement.

  3. Steven Kopits

    Diverting $7.5 bn / month from Russian oil revenues to the Ukrainian budget is no big deal if you know what you’re doing.

      1. pgl

        Oh wow – the big bad incompetent consultant plays the resume grade. You sir are a joke and not a very good one.

        1. Steven Kopits

          Well, if I’m wrong, then the Ukrainians are no worse off than they are today. If you’re wrong, they’re down $7.5 bn / month.

          1. Moses Herzog

            @ StevenKopits
            Well, you can argue I’m not a neutral party in this little personal trade of insults between the two of you. And I’d have to concede you’d be correct. But I’ve had some personal brawls here with pgl on the blog. I dare say I am the only person in the comments section of this blog who knows exactly what pgl’s CV and educational background looks like (certainly who hasn’t been directly told). I’m afraid to inform you he’s got you beat.

            But honestly I’m wondering what kind of degree you got Steven when you don’t understand undergrad beginning 101 Stats texts. I’m about to the point I think the kid that showed up for one day and read the class syllabus before dropping out to switch over to Theater Arts major has you beat.

            But you keep going there Kopits. you’re entertaining and Rosser Junior thinks you’re just jam packed with informational nutrients. Personally I use you more as a “reverse indicator”.

  4. JohnH

    If Ukraine were to win, “ it could still lose the peace. A failed reconstruction process, derailed by Ukraine’s own kleptocrats, poses another serious threat to the Ukrainian state. The European Union and its allies have already committed to helping rebuild Ukraine, such as with the bloc’s newly leaked reconstruction plan, but their efforts must account for the country’s notorious oligarchs. The EU and its allies must work with Ukrainian representatives to maintain oversight over how the reconstruction aid is used, or it risks being siphoned off into the already-swollen pockets of the wealthy.”

    But US politicians oppose any oversight whatsoever…as evidenced by their being appalled by Rand Paul’s demand that a special inspector general be appointed to determine where billions in military aid are going. Apparently not much is reaching the frontlines, which begs the question of where it is going in consummately corrupt Ukraine.

    As we saw in Afghanistan, Iraq and Vietnam, rampant corruption is a hallmark of US pointless and futile wars, something that helps explain the embarrassing result…

    1. pgl

      This is your case that Ukraine should just surrender to your boy Putin? Yea I guess the destruction of an entire culture is something you really want to see happen.

      1. JohnH

        So MacroDuck, your point is that we should just pour money down a rathole?

        BTW I already responded to your offer of a bet.

      2. JohnH

        Apparently some of the $billions that are being siphoned off US aid to Ukraine is finding its way into pgl’s pocket. That could explain why he is such a staunch supporter of Ukraine and all the corruption associated with it. And it could explain why he never complained about past US wars that were pointless and futile…and totally corrupt.

        1. Macroduck

          Evidence? Or are on just making stuff up? ‘Cause you do seem to make up a lot of stuff.

          “Apparently” should mean there is some evidence for you claim, though perhaps only partial evidence. Are you lying by implication, or have you just failed to indicate the evidence that you “apparently” have?

          1. JohnH

            “ Ukraine war veterans on how Kiev plundered US aid, wasted soldiers, endangered civilians, and lost the war.” This report is from investigative journalists. It would be deemed not fit to print by the mainstream media, which propagates only the official narrative parroted by MacroDuck.

            It’s very consistent with the picture of Ukraine’s rampant corruption, widely reported…until it magically stopped being reported this year.

          2. pgl

            August 22, 2022 at 2:31 pm

            The GrayZone? This has to be the most discredited pro-Putin group of liars ever. Look up their background. JohnH is truly the most pathetic little liar EVER!

          3. Noneconomist

            Memory failing. Who on this site makes constant use of the terms “neocon” and “McCarthyite”?
            Same guy who modifies every mention of Russian atrocities as “alleged” while accusing anyone and everyone else of every conceivable despicable act without modification?
            Look, up in the sky! It’s a bird. It’s a plane! It’s Super John, opponent of pointless and futile wars (unless, of course, it’s Russia at the point)

          4. pgl

            Check out The Gray Zone which is Johnny boy’s source for “evidence”. Johnny might as well be quoting Mein Kampf.

        2. pgl

          I’m not the one being paid by the war criminal Putin. You know – comments like these only prove the point. You are one pathetic little cry baby. I guess that is why the other little kids refuse to let Johnny boy play in their sand box.

    2. pgl

      During his election campaign, Ukrainian President Volodymyr Zelensky capitalized on the widespread unpopularity of these kleptocrats by positioning himself as a crusader against the endemic corruption.

      So the idea is to support his efforts not to encourage more war crimes from Putin. Oh wait – you work for Putin. Pardon the interruption.

    3. Macroduck

      Johnny, how often do I have to remind you, this is not a U.S. war? This is a Russian war. The U.S. isn’t fighting this war. Russia attacked Ukraine. Ukraine is defending itself. When are you going to recognize that simple fact? This is even worse than when you get Economic csvwrong, because this doesn’t even require looking anything up; this is not a U.S. war. It’s Russia’s was.

      And by the way, when are you going to man up and accept my bet?

      “If, after the first three quarters of 2022 GDP data are available in “final”, all three are reported down, I’ll stop commenting here for 3 months – all of Q1 2023. That’s on the condition that if all three quarters aren’t reported as having fallen in final, you stop commenting for all of Q1 2023.”

      Put your money where your mouth is Johnny. Grow a spine. Take the bet.

      1. pgl

        It is telling that Johnny boy has decided Rand Paul is the one honest member of the US Senate. Yea – he is that stupid.

        But the article has a point about kleptocratic oligarchs – many of which are Russians with ties to Putin. Me thinks Johnny boy is hoping he can work for them as they rape Ukraine’s economy like they did under the Soviet regime. Oh wait – Johnny boy does not know Russian history either.

      2. pgl

        Again – check out how pathetic The GrayZone is. JohnH pulls this BS routinely. Citing a bunch of Putin’s apologists as an authority on Ukraine? Seriously?

    4. Steven Kopits

      There is a financial aspect to the war and the following peace. More’s the pity that EU and US leadership has zero expertise in oil markets, black markets, or Eastern European psychology. NATO leadership has consistently made decisions against the advice of oil markets experts. I described the embargo, as readers will recall, as insane. And so it has proved. The oil price cap is the very manifestation of amateurism. I am struck how weak Yellen and her Treasury have been at technical analysis and strategy.

      1. pgl

        The advice of the oil experts? What would be that advice? The worthless posts over at your blog which no one reads?

        1. Steven Kopits

          I don’t imagine you know who Pierre Andurand is, but since Andy Hall retired, Andurand is the best know oil trader out there. (I of course advised Hall for several years.) As for Craig Kennedy, I don’t imagine you know what CERA or Harvard are, either.



      2. Macroduck

        If your only tool is an oil market hammer, every problem looks like an oil market nail.

        It is maybe just possible that NATO leaders took a look at the advise of so-called oil market experts and decided there were more important issues to worry about. The world is not merely the oil market, writ large.

        By the way, who are these so-called experts, and what advice do you think they covered?

        1. Steven Kopits

          Here’s the issue, Duckie: If it’s not oil market revenues, what’s the alternative?

          You have five:

          1. Russian CB reserves in the US: $300 bn.
          These could be accessed if Russia is determined to be a state sponsor of terrorism. I think Russia would view such confiscation as an act of war. I would. And then maybe they blow up one of our satellites and see if Biden has the guts to declare war on Russia, or whether the US has just opened a tit-for-tat low level war directly between the US and Russia. Without a declaration of war on Russia, I don’t see confiscating those reserves.

          2. Direct funding form the EU and US
          The EU is heading into a stiff recession, and the US will probably see one next year. Will the public be prepared to pony up $100 bn / year to cover Ukraine’s budget deficits? I have my doubts.

          3. Multilateral loans
          The IMF could lend to Ukraine, and it no doubt will. But the IMF’s biggest exposure to any country is Argentina, and that’s $50 bn. Ukraine would probably need 6-12x that amount. And that requires capital calls, by the way, including of countries like China.

          4. Bootstrapping
          By the end of the war, Ukraine will needs 1-3x GDP to rebuild and pay off debts. That means reconstruction could take 20-30 years, with Kyiv weak all the while. Is that a recipe for sustained peace with the Russians?

          5. Oil Revenues
          This is pretty easily done is you understand the dynamics. And $100 bn / year is available. So if you look down the sources of funding, Russia’s oil revenues are by far the most plausible and accessible.

  5. pgl

    Trump’s racism is beyond disgusting:


    Trump blasted McConnell for saying the GOP might not win the Senate
    McConnell said Republicans are more likely to flip the House than the Senate due to ‘candidate quality’
    Trump accused McConnell and his wife Elaine Chao of ‘getting rich on China’
    Former President Donald Trump has lashed out at Senate Minority Leader Mitch McConnell and his wife, ex-Transportation Secretary Elaine Chao, and accused the couple of “getting rich on China.” In a statement posted on Truth Social on Saturday, Trump called Chao a “crazy wife” and blasted “broken down hack politician” McConnell for saying that the Republicans may not win the Senate in the 2022 midterm elections because of “candidate quality.” “Why do Republicans Senators allow a broken down hack politician, Mitch McConnell, to openly disparage hard working Republican candidates for the United States Senate,” Trump wrote. “This is such an affront to honor and to leadership. He should spend more time (and money!) helping them get elected, and less time helping his crazy wife and family get rich on China!”

    On the other hand, Trump is going to get rich selling out national security secrets to the Kremlin. But hey Russians are white people so it is all good. MAGA!

  6. JohnH

    Apparently some of the $billions that are being siphoned off US aid to Ukraine is finding its way into pgl’s pocket. That could explain why he is such a staunch supporter of Ukraine and all the corruption associated with it. And it could explain why he never complained about past US wars that were pointless and futile…and totally corrupt.

    1. pgl

      Wow – little Johnny can’t get his mommy attention. Come on mom- this baby’s diaper needs changing.

      1. JohnH

        Interesting that pgl didn’t deny that he gets rewarded for parroting the official narrative and disparaging those who don’t. Of course, who’d believe him if he did deny it.

        1. pgl

          The GrayZone gave you that? Hey little lying troll – we all know who they are. You are not only a liar – you are a disgusting Putin war criminal.

  7. Anonymous

    Kiev is the equal to Kabul in terms of possessing any military operation other than high cost, gifted long range fires

    1. Barkley Rosser


      A rather telling detail on this thread is that both you and JohnH insist on spelling the name of the city as the Russians spell it, “Kiev,” rather than as the Ukrainians spell it, “Kyiv” Is it the case that you actually support a full Russian victory so that it will go back to being spelled the way you are spelling it here?

      1. genauer

        How do you call Munich? München?
        Vienna Wien?

        It is custom to use your own language Name of relevant Cities, and not how the indigenous people call it.

        So lets call it Kviv, because it is NOT relevant : – )

Comments are closed.