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Perverse Trade Sanction Effects

Author

Listed:
  • Gabriel Felbermayr
  • Ohyun Kwon
  • Constantinos Syropoulos
  • Yoto V. Yotov

Abstract

Using established econometric techniques and disaggregated data that include intra-national trade flows, we estimate the direct and extraterritorial effects of complete trade sanctions on international trade. Across sectors, the direct effects of complete trade sanctions are negative, as expected. However, their extraterritorial effects are predominantly positive, working in the opposite direction of the direct effects. At the extreme, the extraterritorial effects of complete trade sanctions may fully offset their direct effects and lead to a perverse scenario in which the target’s overall trade rises in the aftermath of sanctions.

Suggested Citation

  • Gabriel Felbermayr & Ohyun Kwon & Constantinos Syropoulos & Yoto V. Yotov, 2026. "Perverse Trade Sanction Effects," CESifo Working Paper Series 12947, CESifo.
    • Handle: RePEc:ces:ceswps:_12947
    as

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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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