Trade Sanctions

14.10.2024 14:15 – 15:30

INSTITUTE OF ECONOMICS AND ECONOMETRICS SEMINAR

Jointly with: Konstantin Egorov, Vasily Korovkin, Alexey Makarin

Abstract:

How effective are trade sanctions? We examine the economic impact of unprecedented sanctions imposed on Russia following February 2022, when Western countries banned the exports of close to 40% of all country-product (HS10) varieties Russia had been importing prior to the war. By combining data on the universe of international trade transactions, domestic railway shipments, firm balance sheets, and government procurement data before and after the sanctions' imposition, we provide the most comprehensive analysis of the economic impact of trade sanctions to date. Using a difference-in-differences approach, we observe that the sanctioned country-product imports experienced a sharp 53% decline compared to non-sanctioned import flows following the war's onset. When aggregated across countries, the total imports of sanctioned products fell by about 47% relative to non-sanctioned products, suggesting that roundabout trade and substitution only partially compensated for the loss of sanctioned imports. Notably, firms with a higher prewar reliance on to-be-sanctioned imports saw a significant reduction in output, with fully exposed firms experiencing a 15% decline. Overall, our findings suggest that, despite widespread anecdotal evidence that sanctions' effectiveness was undermined by substitution and evasion, the sanctions on Russian imports had a sizeable adverse impact on the Russian economy.

Lieu

Bâtiment: Uni Mail

Boulevard du Pont-d'Arve 40
1205 Geneva
Room M 3250, 3rd floor

entrée libre