Working Paper: CEPR ID: DP13549
Authors: Matej Belin; Jan Hanousek
Abstract: In this paper we use a natural experiment of reciprocal imposition of trade sanctions by Russia and the EU since 2014. Using UNCTAD/BACI bilateral flows data we take this unique opportunity to analyse both sanctions. In particular, we study the effectiveness of narrow versus broadly defined sanctions, and differences in the effectiveness of sanctions imposed on exports and imports. We show that the Russian sanctions imposed on European and American food imports resulted in about 8 times stronger decline in trade flows than those imposed by the EU and the US on exports of extraction equipment. These results do not appear to be driven by diversion of trade flows via non-sanctioning countries. Hence the difference in sanctions' effectiveness can be attributed to the broader range of sanctioned goods and potentially to a stronger position of enforcement of sanctions on imports rather than exports.
Keywords: Russia; International Trade; Sanctions; Differences-in-Differences; Bilateral Trade Flows; UNCTAD/BACI Data
JEL Codes: C01; C23; F14
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Russian sanctions on European and American food imports (Q18) | decline in trade flows into Russia (F19) |
| EU and US sanctions on exports of extraction equipment (L71) | decline in trade flows into Russia (F19) |
| broader scope of Russian sanctions (F51) | greater effectiveness of Russian sanctions (F51) |
| narrow targeting of Western sanctions (F51) | weaker impact of Western sanctions (F69) |
| Russian sanctions on European and American food imports (Q18) | decline in imports from non-sanctioning countries (F14) |