The economic costs of trade sanctions: Evidence from North Korea

Jihee Kim, Kyoochul Kim, Sangyoon Park and Chang Sun

Journal of International Economics, 2023, vol. 145, issue C

Abstract: This paper investigates the economic costs of the recent United Nations sanctions on North Korea. Exploiting a novel data set on North Korean firms, we construct measures of regional exposure to export and intermediate input sanctions and show that trade sanctions cause sharp declines in local nighttime luminosity. Additional analysis of newly available product-level price data reveals that import sanctions led to significant increases in market prices. We then estimate a quantitative spatial equilibrium model using cross-region variations. The model implies that the sanctions reduced the country's manufacturing output by 12.9% and real income by 15.3%. We further quantify the potential impact of alternative sanction scenarios.

Keywords: Trade sanction; Regional economy; Spatial equilibrium; North Korea (search for similar items in EconPapers)
JEL-codes: F51 O18 P20 R11 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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Working Paper: The Economic Costs of Trade Sanctions: Evidence from North Korea (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:145:y:2023:i:c:s0022199623000995

DOI: 10.1016/j.jinteco.2023.103813

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