Timing the impact of sanctions on trade

Dai, Mian

doi:10.4337/9781839102721.00031

Cited by 41 publications

(30 citation statements)

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“…Our findings are consistent with the results from Dai et al. (2021), which show that long sanctions (i.e., sanctions that last for more than 5 years) have a stronger negative impact on trade as compared to short sanctions.…”

Section: Estimation Results and Analysissupporting

confidence: 93%

Quantifying the impact of economic sanctions on international trade in the energy and mining sectors

et al. 2022

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Capitalizing on the latest developments in the gravity literature, we utilize two new datasets on sanctions and trade to study the impact of economic sanctions on international trade in the mining sector, which includes oil and natural gas. We demonstrate that the gravity equation is well suited to model bilateral trade in mining and find that sanctions have been effective in impeding mining trade. Our analysis reveals that complete trade sanctions have reduced bilateral mining trade by about 44 percent on average. We also document the presence of significant heterogeneity in the effects of sanctions on mining trade across mining industries and across sanction episodes/cases, depending on the sanctioning and sanctioned countries, the type of sanctions used, and the direction of trade flows. We take a close look at the impact of recent sanctions on Iran and Russia.

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Section: Estimation Results and Analysissupporting

confidence: 93%

Quantifying the impact of economic sanctions on international trade in the energy and mining sectors

et al. 2022

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“…First, the anticipation effects of financial sanctions on trade in goods and services only affect exports, while the post-sanctions effects are stronger for imports of both goods and services. In this dimension, our results indicate weaker effects than those found by Dai et al (2021), though they are identifying first order effects of trade sanctions on trade, while we are identifying second order effects of financial sanctions on trade, or as we put it earlier, collateral damage of financial sanctions. Second, anticipation effects are much stronger for the effect of financial sanctions on inflows of capital, the primary target of financial sanctions, while there are no post-sanction effects on either financial inflows or outflows.…”

Section: Pre-and Post-sanction Effectscontrasting

confidence: 66%

“…While the bulk of the effect of sanctions is contemporaneous, it is possible that they may be preceded by anticipation effects and followed by lingering effects affecting cross-border flows after they are removed. In fact, Dai et al (2021) find significant pre-and post-sanctions effects in the case of trade sanctions, with the post-sanctions effects lingering for 8 years. They argue that including pre-and post-effects increases the estimates of the contemporaneous effect.…”

Section: Pre-and Post-sanction Effectsmentioning

confidence: 91%

“…In a much broader effort Felbermayr et al (2020b) build a new database of 729 sanctions episodes between 1950 and 2016 and demonstrate the extent to which sanctions reduce trade between countries. Dai et al (2021) use the same data source to examine the timing of the effect of sanctions showing there are significant negative anticipatory effects preceding sanctions as well as negative lagging effects which take eight years to dissipate. Ludema (2019, 2020) provide an analysis of the flipside of sanctions imposed on Russia in 2014.…”

Section: Introductionmentioning

confidence: 99%

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Smart or Smash? The Effect of Financial Sanctions on Trade in Goods and Services

BesedeÅ¡¹,

Goldbach²,

Nitsch³

2022

SSRN Journal

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“…Others, such as Jeong and Peksen (2019), have worked to disaggregate causal variables like "regime type," assessing instead the institutional veto players that may influence leaders' decisions to acquiesce to a sender's demands, finding that such domestic institutions have enormous influence over such decisions. Dai et al (2021) also reveal that the duration of trade sanctions produces increasingly negative effects over time, raising the prospect of capitulation by the target.…”

Section: The Problem Of Sanctions Reliefmentioning

confidence: 97%

The shadow of sanctions: reputational risk, financial reintegration, and the political economy of sanctions relief

Raynor

2022

European Journal of International Relations

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Financial sanctions have become a major component of American foreign policy. Since 2015, the number of blacklisted actors has nearly tripled, coinciding with US financial campaigns against Iran, North Korea, and Russia. This paper centers an under-examined paradox of this proliferation: the complexity of lifting financial sanctions. Indeed, successful sanctions regimes necessitate both sticks (punitive sanctions) and carrots (economic incentives). Yet financial sanctions often limit the economic benefits promised to target states, as banks and other financial institutions risk hefty material and reputational costs if they are to cooperate with previously sanctioned actors. Thus, while financial sanctions are effective at producing negative market reactions against a target, they can be hugely damaging if market actors do not cooperate with the lifting of sanctions. To capture this dynamic, this paper leverages process-tracing to observe financial market reactions to sanctions relief in three key cases—Iran (2010–2015), North Korea (2002–2007), and Libya (1996–2008). It finds that in each case, the presence or absence of US Treasury blacklisting corresponds to the post-sanction willingness of financial actors to extend sanctions relief to targeted states. In doing so, this study identifies “reputational risk” as the primary causal mechanism limiting a target’s reintegration into the global economy.

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Timing the impact of sanctions on trade

Cited by 41 publications

References 0 publications

Quantifying the impact of economic sanctions on international trade in the energy and mining sectors

Quantifying the impact of economic sanctions on international trade in the energy and mining sectors

Smart or Smash? The Effect of Financial Sanctions on Trade in Goods and Services

The shadow of sanctions: reputational risk, financial reintegration, and the political economy of sanctions relief

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