A SHARED CRISIS OR ASYMMETRIC OUTCOMES? A Quantitative Analysis of Inflation Dynamics in the European Union Following Russia´s Invasion of Ukraine

Sammanfattning

The sharp increase in inflation across the European Union following Russia´s invasion ofUkraine in February 2022 triggered an economic challenge. While the energy price shockaffected all EU member states, differences in pre-existing dependence on Russian gas mayhave led to asymmetric inflation outcomes. Previous research has focused on the role ofenergy intensity and economic structure in explaining inflation differentials, however lessattention has been paid to geopolitical energy dependence. This thesis therefore examineswhether EU member states with higher dependence on Russian gas experienced relativelystronger inflationary effects following the invasion. Building on the theory of cost-pushinflation, it is assumed that reliance on Russian gas increased vulnerability to supplydisruptions and price uncertainty, thereby amplifying inflationary effects. The analysis appliesa quantitative differences-in-differences design using monthly Harmonised Index ofConsumer Prices (HICP) data combined with annual data on gas imports and gasconsumption for all 27 EU member states during 2021—2023, showing stronger associationsin gas-dependent countries. These findings remain robust when controlling for energyintensity and industrial share and the thesis concludes by discussing implications anddirection for future research.