DP13549 Which Sanctions Matter? Analysis of the EU/Russian Sanctions of 2014

Author(s): Matej Belin, Jan Hanousek
Publication Date: February 2019
Date Revised: February 2019
Keyword(s): Bilateral trade flows, Differences-in-differences, International trade, Russia, sanctions, UNCTAD/BACI data
JEL(s): C01, C23, F14
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=13549

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.