Abstract: In the realm of international politics and diplomacy,economic sanctions have emerged as a non-military coercive tool that is witnessing a notable surge in utilization. Statistical data compiled by Felbermayr et al. (2020) reveals that the span from 2016 to 2019 alone witnessed a total of 75 instances of unilateral,bilateral,and multilateral sanctions. Recent years have witnessed a confluence of events,including the China-United States trade war,Brexit,the Covid-19 pandemic,and the Russia-Ukraine conflict,which collectively led to a stagnation,and at times,even a reversal of the globalization trend,thereby fostering an intensified climate of “de-globalization”. Amid this evolving landscape,the prospect of countries employing economic sanctions to accomplish specific objectives has been on the ascendant.The critical juncture of February 24,2022,saw Putin's official announcement of the initiation of special military operations against Ukraine,coinciding with Zelensky's declaration of Ukraine's full-scale engagement in a state of war. This Russia-Ukraine conflict has engendered two immediate consequences. Firstly,a rapid escalation in global geopolitical risks. The conflict swiftly evolved into Europe's most substantial military confrontation since the culmination of World War II. The uncertain trajectory of these hostilities,coupled with the ominous specter of their escalation and geographic expansion,has propelled global geopolitical risks to unprecedented heights. This elevation of risk is underscored by the IMF's World Economic Outlook for Q1 2022,wherein the term “war” resounds a staggering 122 times. Secondly,the conflict has catalyzed the imposition of economic sanctions of an unprecedented magnitude. Following the outbreak of hostilities,the United States,the European Union,and other relevant parties have imposed far-reaching economic sanctions upon Russia. Noteworthy for their comprehensive utilization of diverse sanctions instruments and influenced by the distinct political and economic positioning of the targeted nations,these sanctions bear unique historical attributes.

This study,which focuses on the Russia-Ukraine conflict,adopts an innovative approach that employs the high-frequency decomposition method,encompassing pre-event trends. It seeks to uncover the spillover effects of economic sanctions upon various countries'stock and foreign exchange markets. Specifically,the research amalgamates the temporal evolution and risk perception features of geopolitical conflict occurrences to dissect the spillover effects of both geopolitical risks and economic sanctions from the rapid fluctuations in stock prices and exchange rates across diverse nations. The findings indicate that economic sanctions against Russia have precipitated heightened volatility in the global stock and foreign exchange markets,with noteworthy variations in the responses of distinct countries.

Subsequently,this study delves into an exploration of the heterogeneous responses among different nations by introducing an array of country-specific characteristic variables. The outcomes shed light on the fact that countries with higher levels of cross-border investment from Russia exhibit a more pronounced negative impact on their stock markets. Similarly,nations that maintain significant imports from Russia experience more considerable currency depreciation. In essence,nations reliant on Russian goods and capital “imports”,as opposed to those engaged in “exports” to Russia,bear more pronounced negative repercussions. This heterogeneity stems from the substantial scale of Russia's investments in foreign countries,surpassing overseas investments in its own nation. Consequently,the freezing of overseas assets swiftly erodes the liquidity and valuation of these assets. Additionally,as an export-oriented economy,Russia's impact is particularly profound on countries heavily dependent on its energy and primary commodity imports.

Further analysis underscores that extensive economic sanctions against Russia could substantially elevate global commodity prices,thereby amplifying the risk of stagflation within the global economy. Furthermore,the spillover effects of these economic sanctions could also reshape the global supply chain paradigm to a certain extent. Notably,nations with a strong reliance on Russia's energy exports would confront heightened inflationary pressures,while energy-producing nations would benefit from substitution effects,boosting their energy exports and strengthening their global supply chain positioning.

The contributions of this study are manifold. Primarily,it provides a cohesive research framework encompassing countries worldwide,aiming to examine the broader global spillover ramifications of economic sanctions. This departs from earlier literature which often focused on the effects of sanctions in isolation on either the sanctioned or the sanctioning nations,overlooking the extensive extraterritorial consequences under the context of economic integration and financial globalization. A study by Kwon et al. (2022) scrutinized the impact of US economic sanctions against Cuba on other nations' trade status during that year. However,the Cuban economy's limited size and low-frequency data have prompted debates about the strict causal connection between the two variables. In contrast,this study undertakes a more robust exploration of the “economic sanctions spillover effects” through a comprehensive analysis of the widespread sanctions against Russia.

Secondly,the study provides economic rationales to elucidate the differential responses observed in stock and foreign exchange markets across various nations. It complements existing research by delving into potential implications of economic sanctions on global stagflation and supply chain restructuring. By delving into the causes of heterogeneous spillover effects from economic sanctions through the lens of national characteristics,the paper unravels the intrinsic logic while interconnecting it with the sanctions' toolkit utilization and Russia's unique economic and financial structure. Moreover,it assesses the plausible repercussions of economic sanctions on the broader global context,contributing to an enriched research scope.

Lastly,the study boasts wide-ranging practical implications and applicability. Through its innovative utilization of the high-frequency decomposition method,encompassing ex-ante trends,it effectively isolates the distinct impacts of geopolitical risks and economic sanctions. This methodological framework lays the groundwork for subsequent research endeavors,offering valuable indicators for forthcoming investigations in this domain.