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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:
  • Felbermayr, Gabriel

    () (Kiel Institute, Kiel University)

  • Syropoulos, Constantinos

    () (School of Economics, Drexel University & CESifo.)

  • Yalcin, Erdal

    () (Konstanz University of Applied Sciences & CESifo)

  • Yotov, Yoto

    () (School of Economics, Drexel University & CESifo & ifo Institute & ERI-BAS)

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.

Suggested Citation

  • Felbermayr, Gabriel & Syropoulos, Constantinos & Yalcin, Erdal & Yotov, Yoto, 2019. "On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database," School of Economics Working Paper Series 2019-3, LeBow College of Business, Drexel University.
  • Handle: RePEc:ris:drxlwp:2019_003
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    References listed on IDEAS

    as
    1. Tibor BesedeŇ° & Stefan Goldbach & Volker Nitsch, 2018. "Cheap Talk? Financial Sanctions and Non-Financial Activity," CESifo Working Paper Series 7069, CESifo Group Munich.
    2. 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).
    3. 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.
    4. Crozet, Matthieu & Hinz, Julian, 2016. "Friendly fire - the trade impact of the Russia sanctions and counter-sanctions," Kiel Working Papers 2059, Kiel Institute for the World Economy (IfW).
    5. Jamal Ibrahim Haidar, 2017. "Sanctions and export deflection: evidence from Iran," Economic Policy, CEPR;CES;MSH, vol. 32(90), pages 319-355.
    6. Mario Larch & Joschka Wanner, 2014. "Carbon Tariffs: An Analysis of the Trade, Welfare and Emission Effects," CESifo Working Paper Series 4598, CESifo Group Munich.
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    More about this item

    Keywords

    Sanctions; Effectiveness of Sanctions; Structural Gravity;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • 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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