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Perverse Trade Sanction Effects

Author

Listed:
  • Gabriel Felbermayr

    (Vienna University of Economics and Business and Austrian Institute of Economic Research (WIFO))

  • Ohyun Kwon

    (University of Pennsylvania and Center for Global Policy Analysis (CGPA))

  • Constantinos Syropoulos

    (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA))

  • Yoto V. Yotov

    (School of Economics, Drexel University and Center for Global Policy Analysis (CGPA))

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," Working Papers 202615, Center for Global Policy Analysis, LeBow College of Business, Drexel University.
    • Handle: RePEc:drx:wpaper:202615
    as

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    File URL: https://www.lebow.drexel.edu/sites/default/files/2026-08/CGPA-202615-perverse-trade-sanctions.pdf
    File Function: First version, 2026
    Download Restriction: no
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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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