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On target? The incidence of sanctions across listed firms in Iran

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  • Mirko Draca
  • Jason Garred
  • Leanne Stickland
  • Nele Warrinnier

Abstract

How successful are sanctions at targeting the economic interests of political elites in affected countries? We study the e fficacy of targeting in the case of Iran, using information on the stock exchange-listed assets of two specific political entities with substantial influence over the direction of Iran's nuclear program. Our identification strategy focuses on the process of negotiations for sanctions removal, examining which interests benefit most from news about diplomatic progress. We find that the stock returns of firms owned by targeted political elites respond especially sharply to such news, though other listed firms unconnected to these elites also benefit from progress towards sanctions relief. These results indicate the `bluntness' of sanctions on Iran, but also provide evidence of their effectiveness in generating economic incentives for elite policymakers to negotiate a deal for sanctions relief.

Suggested Citation

  • Mirko Draca & Jason Garred & Leanne Stickland & Nele Warrinnier, 2019. "On target? The incidence of sanctions across listed firms in Iran," Working Papers of LICOS - Centre for Institutions and Economic Performance 648954, KU Leuven, Faculty of Economics and Business (FEB), LICOS - Centre for Institutions and Economic Performance.
  • Handle: RePEc:ete:licosp:648954
    Note: paper number 413/2019
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    Cited by:

    1. Daniel P. Ahn & Rodney D. Ludema, 2019. "The sword and the shield: the economics of targeted sanctions," CESifo Working Paper Series 7620, CESifo.
    2. Fetzer, Thiemo & Schwarz, Carlo, 2019. "Tariffs and Politics: Evidence from Trump's Trade Wars," CEPR Discussion Papers 13579, C.E.P.R. Discussion Papers.
    3. Peeva, Aleksandra, 2019. "Did sanctions help Putin?," Discussion Papers 2019/7, Free University Berlin, School of Business & Economics.
    4. 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.
    5. Fetzer, Thiemo & Schwarz, Carlo, 2019. "Tariffs and Politics: Evidence from Trump’s Trade Wars," The Warwick Economics Research Paper Series (TWERPS) 1227, University of Warwick, Department of Economics.
    6. Fetzer, Thiemo & Schwarz, Carlo, 2019. "Tariffs and Politics: Evidence from Trump’s Trade Wars," CAGE Online Working Paper Series 407, Competitive Advantage in the Global Economy (CAGE).
    7. Philippe Aghion & Ralph Haas & Guido Friebel & Sergei Guriev & Jan Luksic, 2017. "Introduction to the Special Issue on the Economics of the Middle East and North Africa," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 25(2), pages 141-148, April.

    More about this item

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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