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On the Heterogeneous Effects of Sanctions on Trade and Welfare: Evidence from the Sanctions on Iran and a New Database

Author

Listed:
  • Felbermayr, Gabriel

    (Kiel Institute & Kiel University)

  • Syropoulos, Constantinos

    (Drexel University)

  • Yalcin, Erdal

    (HTWG Konstanz)

  • Yotov, Yoto

    (Drexel University)

Abstract

Using a new, comprehensive database, we study the impact of sanctions on international trade and welfare. Specifically, capitalizing on the latest developments in the structural gravity literature, we quantify the partial and general equilibrium effects of sanctions. Starting with a broad evaluation of the impact of sanctions, we carefully investigate the case of Iran. We find that the effects are significant but also widely heterogeneous across sanctioning countries and dependent on the direction of trade, even within the European Union. We also perform a counterfactual analysis of removing the sanctions on Iran, which translates our partial estimates into sizable and heterogeneous (across both countries and sectors), but also intuitive, general equilibrium effects within the same framework.

Suggested Citation

  • Felbermayr, Gabriel & Syropoulos, Constantinos & Yalcin, Erdal & Yotov, Yoto, 2020. "On the Heterogeneous Effects of Sanctions on Trade and Welfare: Evidence from the Sanctions on Iran and a New Database," School of Economics Working Paper Series 2020-4, LeBow College of Business, Drexel University.
    • Handle: RePEc:ris:drxlwp:2020_004
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    Citations

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    Cited by:

    1. Mario Larch & Jeff Luckstead & Yoto V. Yotov, 2021. "Economic Sanctions and Agricultural Trade," CESifo Working Paper Series 9410, CESifo.
    2. Gutmann, Jerg & Neuenkirch, Matthias & Neumeier, Florian, 2022. "Do China and Russia Undermine US Sanctions? Evidence from DiD and Event Study Estimation," ILE Working Paper Series 64, University of Hamburg, Institute of Law and Economics.
    3. Gutmann, Jerg & Neuenkirch, Matthias & Neumeier, Florian, 2023. "The economic effects of international sanctions: An event study," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1214-1231.
    4. Felbermayr, Gabriel & Morgan, T. Clifton & Syropoulos, Constantinos & Yotov, Yoto V., 2021. "Understanding economic sanctions: Interdisciplinary perspectives on theory and evidence," European Economic Review, Elsevier, vol. 135(C).
    5. Hayakawa,Kazunobu & Kumagai,Satoru, 2022. "The trade effect of economic sanctions: evidence from the 2022 Russia-Ukraine conflict," IDE Discussion Papers 857, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Javad Nosratabadi, 2023. "The effect of trade sanctions on employment through total factor productivity," International Economics and Economic Policy, Springer, vol. 20(1), pages 163-187, February.
    7. Mario Larch & Jeff Luckstead & Yoto V. Yotov, 2021. "Economic Sanctions and Agricultural Trade," CESifo Working Paper Series 9410, CESifo.
    8. Mario Larch & Serge Shikher & Constantinos Syropoulos & Yoto V. Yotov, 2022. "Quantifying the impact of economic sanctions on international trade in the energy and mining sectors," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1038-1063, July.
    9. Nobuhiro Hosoe, 2022. "Quantifying the Impacts of Sanctions Following Russia’s Invasion of Ukraine," GRIPS Discussion Papers 22-06, National Graduate Institute for Policy Studies.
    10. Arbatli, Cemal Eren & Gomtsyan, David, 2021. "Sectarian aid, sanctions and subnational development," European Economic Review, Elsevier, vol. 139(C).
    11. Felbermayr, Gabriel & Kirilakha, Aleksandra & Syropoulos, Constantinos & Yalcin, Erdal & Yotov, Yoto V., 2020. "The global sanctions data base," European Economic Review, Elsevier, vol. 129(C).
    12. Kwon, Ohyun & Syropoulos, Constantinos & Yotov, Yoto, 2022. "The Extraterritorial Effects of Sanctions," School of Economics Working Paper Series 2022-3, LeBow College of Business, Drexel University.
    13. Anirudh Shingal, 2023. "Sanctions and services trade: the neglected dimension," RSCAS Working Papers 2023/39, European University Institute.
    14. Fernando A I González, 2022. "International sanctions and development: Evidence from Latin America and the Caribbean (1950–2019)," Economic Affairs, Wiley Blackwell, vol. 42(1), pages 70-86, February.
    15. Du, Xiayi & Wang, Zi, 2022. "Multinationals, global value chains, and the welfare impacts of economic sanctions," Economics Letters, Elsevier, vol. 220(C).

    More about this item

    Keywords

    Sanctions; Effectiveness of Sanctions; Structural Gravity;
    All these keywords.

    JEL classification:

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