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On the Effects of Sanctions on Trade and Welfare: New Evidence Based on Structural Gravity and a New Database

Author

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  • 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

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    Cited by:

    1. Eckhard Janeba, 2024. "Extraterritorial trade sanctions: Theory and application to the US–Iran–EU conflict," Review of International Economics, Wiley Blackwell, vol. 32(1), pages 49-71, February.
    2. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? Estimating the Trade Relocation Effects from Civil Conflict," Hannover Economic Papers (HEP) dp-698, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    3. Kim, Jihee & Kim, Kyoochul & Park, Sangyoon & Sun, Chang, 2023. "The economic costs of trade sanctions: Evidence from North Korea," Journal of International Economics, Elsevier, vol. 145(C).
    4. Gold, Robert & Hinz, Julian & Valsecchi, Michele, 2023. "To Russia with love? The impact of sanctions on regime support," Kiel Working Papers 2212, Kiel Institute for the World Economy (IfW Kiel).
    5. Farag, Markos & Zaki, Chahir, 2021. "On the Determinants of Trade in Natural Gas: A Political Economy Approach," EWI Working Papers 2021-8, Energiewirtschaftliches Institut an der Universitaet zu Koeln (EWI).
    6. Flach, Lisandra & Heiland, Inga & Larch, Mario & Steininger, Marina & Teti, Feodora A., 2023. "Quantifying the partial and general equilibrium effects of sanctions on Russia," Open Access Publications from Kiel Institute for the World Economy 302103, Kiel Institute for the World Economy (IfW Kiel).
    7. Korn, Tobias & Stemmler, Henry, 2022. "Your Pain, My Gain? On the Trade Relocation Effects from Civil Conflict," VfS Annual Conference 2022 (Basel): Big Data in Economics 264095, Verein für Socialpolitik / German Economic Association.
    8. Ali Dadpay & Saleh S. Tabrizy, 2021. "Political Agreements and Exporting Activities: An Empirical Assessment of the Effects of the JCPOA Agreement on Iran’s Exports," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 63(1), pages 147-180, March.
    9. Demena, B.A. & Benalcazar Jativa, G. & Reta, A.S. & Kimararungu, P.B. & van Bergeijk, P.A.G., 2021. "Does research on economic sanctions suffer from publication bias?," ISS Working Papers - General Series 674, International Institute of Social Studies of Erasmus University Rotterdam (ISS), The Hague.
    10. Firat Demir & Saleh S. Tabrizy, 2022. "Gendered effects of sanctions on manufacturing employment: Evidence from Iran," Review of Development Economics, Wiley Blackwell, vol. 26(4), pages 2040-2069, November.
    11. Fatemeh Rahimzadeh & Hamed Pirpour & Bahman P. Ebrahimi, 2022. "The impact of economic sanctions on the efficiency of bilateral energy exports: the case of Iran," SN Business & Economics, Springer, vol. 2(9), pages 1-18, September.
    12. Weber, Patrick M. & Schneider, Gerald, 2020. "How many hands to make sanctions work? Comparing EU and US sanctioning efforts," European Economic Review, Elsevier, vol. 130(C).

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    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
    • 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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