Brothers in Arms: The Value of Coalitions in Sanctions Regimes

Sonali Chowdhry, Julian Hinz, Katrin Kamin and Joschka Wanner

No 2021, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper examines the impact of coalitions on the economic costs of the 2012 Iran and 2014 Russia sanctions. By estimating and simulating a quantitative general equilibrium trade model under different coalition setups, we (i) dissect welfare losses for sanctions senders and target; (ii) compare prospective coalition partners and; (iii) provide bounds for the sanctions potential — the maximum welfare change attainable — when sanctions are scaled vertically, i.e. with measures deepening up to an embargo, and horizontally, i.e. with coalitions expanding up to a global regime. To gauge the significance of simulation outcomes, we implement a Bayesian bootstrap procedure that generates confidence bands. Relative to unilateral action, we find that coalitions magnify welfare losses imposed while their impact on domestic welfare loss incurred depends on the design and sectoral dimension of sanctions. Hypothetical cooperation of large developing economies such as China additionally raises the deterrent force of coalitions. Finally, we quantify transfers that equalise welfare losses across coalition members to further demonstrate asymmetries in the relative economic burden of sanctions.

Keywords: Sanctions; embargoes; alliances; sectoral linkages (search for similar items in EconPapers)
JEL-codes: F13 F14 F17 F51 (search for similar items in EconPapers)
Pages: 30 p.
Date: 2022
New Economics Papers: this item is included in nep-ara, nep-cis, nep-int and nep-tra
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Brothers in arms: the value of coalitions in sanctions regimes (2024)
Working Paper: Brothers in Arms: The Value of Coalitions in Sanctions Regimes (2023)
Working Paper: Brothers in arms: The value of coalitions in sanctions regimes (2022)
Working Paper: Brothers in arms: The value of coalitions in sanctions regimes (2022)
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