PAPER · 2026 · working paper · in preparation; SSRN target Oct 2026, JDE / AEJ:Applied target Feb 2027

Occlusion and adaptation: a closed-loop spatial-labor model of Ukraine's wartime economic reorganization, 2022-2025

Ian Helfrich, Elizaveta Gonchar

Applies the Penumbra closed-loop observation framework to the best-instrumented wartime economic reorganization in history. Combines pre-war hromada-level administrative granularity, dense commercial satellite coverage (Planet, Maxar, Sentinel, VIIRS Black Marble), AIS data on Black Sea grain corridors, displaced-population tracking from UN/IOM and Ukrainian state registers, and KSE Institute damage and trade-disruption data. Decomposes the spatial reorganization of Ukrainian economic activity between Q1 2022 and Q1 2026 into destruction, evacuation/relocation, conscription-driven labor withdrawal, and sectoral adaptation (IT services, agriculture, defense-industrial expansion). Produces a quarterly Ukraine Shadow-Activity Index as a public-good output.

Flagship first joint paper of the Penumbra program. Four research questions:

  1. Measurement. What is the divergence between officially measured Ukrainian economic activity (Ukrstat, NBU nowcasts) and a structurally modeled closed-loop estimate that accounts for endogenous observability loss in contested, occupied, and depopulated territories?

  2. Spatial reorganization. How has the spatial distribution of economic mass reorganized across Ukrainian oblasts and hromadas, decomposed into destruction, evacuation, conscription-driven labor withdrawal, and sectoral adaptation?

  3. Labor composition under shock. How did occupational composition within surviving firms adapt to labor supply shocks of unprecedented magnitude (roughly one million mobilized, six to eight million displaced)?

  4. Sanctions counterfactual. Using the Penumbra framework, what does Ukraine-adjacent Russian economic activity look like under true closed-loop conditions, and what does that imply about sanctions architecture effectiveness?

Liz leads the spatial-labor and GIS work and brings Russian-language source access (Ukrstat, NBU communications, KSE reports, Russian-language satellite-analytic research, Kiel/ifW and DIW reports in German). Ian leads the closed-loop OT framework and the Penumbra-spine integration.

Pathway to the KSE Institute (Hilgenstock, Shapoval) is open and warm; no Russian-institutional affiliations on either side.