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On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database

Author

Listed:
  • Gabriel J. Felbermayr
  • Constantinos Syropoulos
  • Erdal Yalcin
  • Yoto V. Yotov

Abstract

Using a new, global data base covering the years 1950 to 2015, we study the impact of sanctions on international trade and welfare. We make use of the rich dimensionality of our data and of the latest developments in the structural gravity literature. Starting with a broad evaluation by sanction type, we carefully investigate the case of Iran. Effects are significant but also widely heterogeneous across sanctioning countries. Moreover, they depend on the direction of trade. We also perform a counterfactual analysis which translates our partial equilibrium sanction estimates into heterogeneous but intuitive general equilibrium effects within the same framework.

Suggested Citation

  • Gabriel J. Felbermayr & Constantinos Syropoulos & Erdal Yalcin & Yoto V. Yotov, 2019. "On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database," CESifo Working Paper Series 7728, CESifo.
  • Handle: RePEc:ces:ceswps:_7728
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    References listed on IDEAS

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    1. Tibor Besedeš & Stefan Goldbach & Volker Nitsch, 2018. "Cheap Talk? Financial Sanctions and Non-Financial Activity," CESifo Working Paper Series 7069, CESifo.
    2. Larch, Mario & Wanner, Joschka, 2017. "Carbon tariffs: An analysis of the trade, welfare, and emission effects," Journal of International Economics, Elsevier, vol. 109(C), pages 195-213.
    3. Piermartini, Roberta & Yotov, Yoto, 2016. "Estimating Trade Policy Effects with Structural Gravity," School of Economics Working Paper Series 2016-10, LeBow College of Business, Drexel University.
    4. Jamal Ibrahim Haidar, 2017. "Sanctions and export deflection: evidence from Iran," Economic Policy, CEPR;CES;MSH, vol. 32(90), pages 319-355.
    5. Draca, Mirko & Garred, Jason & Stickland, Leanne & Warrinnier, Nele, 2018. "On Target? The Incidence of Sanctions Across Listed Firms in Iran," CAGE Online Working Paper Series 372, Competitive Advantage in the Global Economy (CAGE).
    6. Caruso Raul, 2003. "The Impact of International Economic Sanctions on Trade: An Empirical Analysis," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 9(2), pages 1-36, April.
    7. Matthieu Crozet & Julian Hinz, 2020. "Friendly fire: the trade impact of the Russia sanctions and counter-sanctions," Economic Policy, CEPR;CES;MSH, vol. 35(101), pages 97-146.
    8. Aichele, Rahel & Heiland, Inga, 2018. "Where is the value added? Trade liberalization and production networks," Journal of International Economics, Elsevier, vol. 115(C), pages 130-144.
    9. Gary Clyde Hufbauer & Jeffrey J. Schott & Kimberly Ann Elliott, 2009. "Economic Sanctions Reconsidered, 3rd Edition (paper)," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4129, July.
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    Cited by:

    1. Ali Dadpay & Saleh S. Tabrizy, 2021. "Political Agreements and Exporting Activities: An Empirical Assessment of the Effects of the JCPOA Agreement on Iran’s Exports," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(1), pages 147-180, March.
    2. Demena, B.A. & Benalcazar Jativa, G. & Reta, A.S. & Kimararungu, P.B. & van Bergeijk, P.A.G., 2021. "Does research on economic sanctions suffer from publication bias?," ISS Working Papers - General Series 674, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    3. Weber, Patrick M. & Schneider, Gerald, 2020. "How many hands to make sanctions work? Comparing EU and US sanctioning efforts," European Economic Review, Elsevier, vol. 130(C).

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    More about this item

    Keywords

    sanctions; effectiveness of sanctions; structural gravity;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

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