Research on the Impact of Economic Policy Uncertainty on Russian Foreign Trade

This study investigates the impact of Economic Policy Uncertainty (EPU) on Russia's foreign trade, focusing on both domestic and partner-country uncertainties. Using panel data from 2003 to 2021 for Russia and 18 partner countries, we employ fixed-effects regression models to analyze trade flows. The results indicate that Russia’s domestic EPU has a statistically significant negative effect on bilateral trade, with a 1% increase in domestic uncertainty leading to a 7.04% decrease in trade volume. In contrast, partner-country economic policy uncertainty does not significantly affect Russia's trade. This suggests that external policy uncertainty has limited influence on Russia's trade, likely due to the relatively stable demand for its energy exports. Additionally, the analysis of heterogeneity reveals that domestic uncertainty negatively and significantly impacts imports, with a 1% increase in domestic uncertainty leading to 8.32% decrease in import trade volume. At the same time, partner-country’s EPU has no significant influence on both import and export.