Friendly Fire: The Trade Impact of the Russia Sanctions and Counter-Sanctions

Matthieu Crozet and Julian Hinz. Forthcoming at Economic Policy.

Trade and financial sanctions are some of the favorites in the toolbox of foreign policy. Meant to hurt the target country’s economy through artificial trade barriers in the form of restrictions or bans on trade of certain goods and services, severance of financial ties, or an all-out embargo, sanctions are used when diplomacy fails yet military options appear too drastic. Few studies have evaluated the effects of sanctions in the sender country’s economy. Domestic exporters and importers may be cut off from an important partner country or transfers of goods and money are made more costly. The aim of this project is to shed light on the issue at hand using a rich data set of monthly French firm-level exports.

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