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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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    More about this item

    Keywords

    Sanctions; Effectiveness of Sanctions; Structural Gravity;

    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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