Do Sanctions Affect Growth?

Ohyun Kwon, Constantinos Syropoulos () and Yoto Yotov

No 2022-6, School of Economics Working Paper Series from LeBow College of Business, Drexel University

Abstract: Direct measures of the economic impact of sanctions are contaminated by the endogeneity that arises when other events in target countries (e.g., civil or interstate conflicts, political independence, etc.) instigate the imposition of sanctions. To address this issue, we propose a novel instrument, sender's aggressiveness, captured by the number of sanctions imposed in a given year. After establishing the validity of this instrument, we quantify the impact of sanctions on growth in sanctioned states and show that, on average, an additional sanction decreases contemporaneous real GDP per capita in target states by 0.39 percent. We also substantiate the presence of a significant (in magnitude) downward bias in the corresponding OLS estimates and demonstrate that the effects of sanctions on growth vary widely depending on the types of sanctions considered, their purported objectives, measures of their success, and the duration of their effects.

Keywords: Real GDP per capita growth; trade sanctions; smart sanctions; long-run effects (search for similar items in EconPapers)
JEL-codes: F43 F51 F63 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2022-06-28
New Economics Papers: this item is included in nep-int
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://drive.google.com/file/d/1-1TIebbPPvMtdz6WW ... wa8/view?usp=sharing Full text (application/pdf)

Related works:
Working Paper: Do Sanctions Affect Growth? (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:drxlwp:2022_006

Access Statistics for this paper

More papers in School of Economics Working Paper Series from LeBow College of Business, Drexel University Contact information at EDIRC.
Bibliographic data for series maintained by Richard C. Barnett ().