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Timing the Impact of Sanctions on Trade

Author

Listed:
  • Dai, Mian

    (School of Economics)

  • Felbermayr, Gabriel

    (Kiel Institute & Kiel University)

  • Kirilakha, Aleksandra

    (School of Economics)

  • Syropoulos, Constantinos

    (School of Economics)

  • Yalcin, Erdal

    (University of Applied Sciences Constance)

  • Yotov, Yoto

    (School of Economics)

Abstract

We capitalize on the latest estimation methods in the empirical gravity literature and the development of a new dataset (the Global Sanctions Data Base, GSDB) to study the evolution, over time, of the effects of sanctions on international trade. Our analysis reveals that the contemporaneous effects of sanctions on trade are large, negative and statistically significant. Additionally, we obtain negative and significant anticipatory effects prior to the official imposition of sanctions, as well as negative and significant post-sanction effects, which disappear gradually approximately eight years after the lifting of sanctions. Our work generates several insights related to the estimation of the impact of sanctions on trade and unveils new avenues for future work. For example, we find the strength of the negative impact of sanctions to rise with the duration of the time that sanctions are in force. Moreover, our analysis of unilateral vs. multilateral and US vs. UN vs. EU sanctions suggests that unilateral sanctions and sanctions imposed by the US stand out as being most effective. A battery of sensitivity experiments confirms the robustness of our main findings and conclusions.

Suggested Citation

  • Dai, Mian & Felbermayr, Gabriel & Kirilakha, Aleksandra & Syropoulos, Constantinos & Yalcin, Erdal & Yotov, Yoto, 2021. "Timing the Impact of Sanctions on Trade," School of Economics Working Paper Series 2021-7, LeBow College of Business, Drexel University, revised 19 Feb 2021.
    • Handle: RePEc:ris:drxlwp:2021_007
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    Citations

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    Cited by:

    1. Tibor Besedeš & Stefan Goldbach & Volker Nitsch, 2024. "Smart or smash? The effect of financial sanctions on trade in goods and services," Review of International Economics, Wiley Blackwell, vol. 32(1), pages 223-251, February.
    2. 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.
    3. 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).
    4. 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.
    5. Anirudh Shingal, 2023. "Sanctions and services trade: the neglected dimension," RSCAS Working Papers 2023/39, European University Institute.
    6. Devasmita Jena & C. Akash & Prachi Gupta, 2023. "Deflecting Economic Sanctions: Do Trade and Political Alliances Matter?," Working Papers 2023-248, Madras School of Economics,Chennai,India.

    More about this item

    Keywords

    Sanctions; the GSDB; Trade Effects; Timing; Duration; Evolution;
    All these keywords.

    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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