Vasily Korovkin

(Universitat Pompeu Fabra)

will give a presnetation on 

Trade Sanctions

Abstract 

How effective are trade sanctions? We examine the economic impact of the unprecedented sanctions imposed on Russia following February 2022, when Western countries banned exports of nearly 40% of all country-product varieties Russia had been importing prior to the war. By combining novel, manually-collected records of these sanctions with the universe of Russian international trade transactions, firm balance sheets, and government procurement data, we provide the most comprehensive analysis of the economic impact of trade sanctions on a target country to date. Using a difference-in-differences approach, we find that the sanctioned country-product imports into Russia experienced a sharp 62% decline compared to non-sanctioned import flows following the war's onset. Total imports of sanctioned products fell by 28%, suggesting that while roundabout trade and substitution were substantial, they did not fully offset the decline in sanctioned imports. Firms that relied on to-be-sanctioned imports experienced a 15% reduction in output. This pattern is also observed in the manufacturing and science and technology sectors, as well as for firms that are part of military-adjacent supply chains. Overall, our findings suggest that, despite anecdotal evidence highlighting sanctions' ineffectiveness, the sanctions on the exports to Russia had an adverse impact on the Russian economy.