firm-level trade · Julian Hinz

Trade Sanctions: Evidence From Russia

Julian Hinz — Fri, 23 Oct 2026 00:00:00 +0000

Number of exported products by French firms following the imposition of sanctions against Russia in 2022.

We review the economics of trade sanctions and provide new macro and micro evidence with the Russia 2014 and 2022 episodes as central case studies. On the macro side, we calibrate a multi-country, multi-sector general-equilibrium trade model with input–output linkages to quantify welfare effects under alternative coalition and intensity scenarios. Relative to 2014, the 2022 measures imposed substantially larger costs on Russia (about –2.6% of real income) while the average cost for EU/UK senders remained modest (around –0.1%), with larger losses in highly exposed small economies. Coalitions amplify pressure on the target at limited additional cost for most senders; hypothetical extensions bound sanctions potential (e.g., global participation or embargoes). On the micro side, using French customs data (monthly firm–product–destination flows, 2021–2023) and a triple-difference design, we show that exports to Russia fell by roughly three quarters after February 2022. The adjustment is dominated by the extensive margin, with smaller but significant intensive-margin declines among continuing firms. Targeted products contracted far more than non-targeted ones (dual-use goods most severely), and we document diversion consistent with rerouting to nearby non-sanctioning countries. We further discuss financial channels that propagate losses beyond listed goods, limits of ``smart'' sanctions when governments shield strategic firms, and political responses—including rally-around-the-flag effects.

Shooting down trade: Firm-level effects of embargoes

Uğur Aytun — Sat, 01 Mar 2025 00:00:00 +0000

Imposition and lifting effect of the embargo.

In November 2015, Turkey’s unexpected downing of a Russian military jet in Syria prompted Russia to impose a swift and comprehensive embargo on specific Turkish exports. This study leverages this quasi-natural experiment to estimate both the immediate and longer-term effects of the imposition and subsequent lifting of these sanctions. Utilizing administrative data encompassing all Turkish exporters, we first examine the impact on trade at the firm level, assessing the direct effects of the embargo, the redirection of trade to alternative markets, and the circumvention through other products. Second, we investigate broader repercussions on domestic operations, including firms’ sales, procurement, and employment. Our findings show that while the embargo caused immediate and substantial declines in exports of affected products to Russia, firms partially mitigated these losses through trade diversion. Although relative trade patterns normalized post-sanctions, absolute trade values remained subdued. The analysis reveals that affected firms experienced declines in domestic sales and supplier relationships, with temporary disruptions in employment. However, most negative effects dissipated following the embargo’s removal, except for some persistent reductions in procurement and supplier links, likely linked to the persistent lower trade volumes even after the embargo ended. These results contribute to the understanding of sanctions’ broader economic implications and the resilience of firms facing trade disruptions.

Firm-level Gravity with Fixed Effects

Uğur Aytun — Fri, 19 Apr 2024 00:00:00 +0000

This paper introduces a new method for estimating gravity equations at the firm level by leveraging both firm and country-level trade data. By constructing a flexible estimation strategy that accounts for firm-level and country-level characteristics, in particular for multilateral resistances at origin and destination, we offer a novel approach to measure the impact of policy changes such as tariffs, sanctions, etc., on trade flows. Through a series of simulations and replications of established firm-level gravity estimations, we validate the robustness of our methodology. Our findings not only contribute to the empirical trade literature by providing a more precise analytical tool but also have significant policy implications, highlighting the heterogeneous effects of economic policies on firms within and across countries.

Exchange Rate Pass-Around

Matthieu Crozet — Sat, 25 Mar 2023 00:00:00 +0000

Exchange rate pass-around and pass-through over time.

In January 2015, The Swiss Franc (CHF) appreciated unexpectedly against the Euro by approximately 15%. We document a new fact: French firms that exported to both the Swiss market and the Eurozone also exhibited a sudden change in their export prices to the Eurozone. We coin this the “exchange rate pass-around” effect. We rationalise this fact with a simple model based on the endogenous decision of some firms to give up pricing-to-market and opt for single-pricing to all markets. An important implication of this finding is that single-pricing may be one of the causes of the incomplete pass-through. This mechanism has so far remained unexplored in the literature, which may have led to overestimating the importance of other factors. Based on monthly French export data, an empirical analysis confirms the existence of the pass-around. Firms directly affected by the CHF exchange rate shock increased their prices in neighboring markets by 0.8% compared to other exporters. The effect was stronger for firms with lower ex-ante price heterogeneity across markets and those with smaller trade costs to Switzerland. However, the effect was short-lived. As time passed, exporters tended to decouple the prices they set on the Swiss market from those for the Eurozone, and the pass-around effect faded.

Effects of the AfCFTA for German and European Companies

Julian Hinz — Sat, 01 Oct 2022 00:00:00 +0000

In May 2019, the African Continental Free Trade Area (AfCFTA) agreement entered into force. In numerous respects, the AfCFTA can be considered a historic milestone towards trade liberalization on the African continent. Following ten rounds of official negotiations beginning in June 2015, the agreement now spans 55 African Union Member States of which 43 have already deposited their instruments of ratification. By connecting these economies, AfCFTA has become the largest trading bloc in the world in terms of market size, covering more than 1.3 billion consumers with combined GDP of USD 2.5 trillion. The AfCFTA’s core objective is to deepen the economic integration of the African continent by creating a single market for the movement of goods, services, capital and natural persons. In this study, we assess the status quo of trade within AfCFTA economies and between AfCFTA and EU economies, and outline three hypothetical future outcomes of AfCFTA for different levels of trade liberalization. The study was conducted with the support of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ).

Firms’ exporting behaviour to countries under sanctions

Julian Hinz — Fri, 05 Mar 2021 00:00:00 +0000

Worth the pain? Firms' exporting behaviour to countries under sanctions

Matthieu Crozet — Sun, 31 Jan 2021 00:00:00 +0000

Evolution of number of firms in face of sanctions.

How do exporting firms react to sanctions? Specifically, which firms are willing — or capable — to serve the market of a sanctioned country? We investigate this question for four sanctions episodes using monthly data on the universe of French exporting firms. We draw on recent econometric advances in the estimation of dynamic fixed effects binary choice models. We find that the introduction of new sanctions in Iran and Russia significantly lowered firm-level probabilities of serving these sanctioned markets, while the (temporary) lifting of the U.S. sanctions on Cuba and the removal of sanctions against Myanmar had no or only small trade-inducing effects, respectively. Additionally, the impact of sanctions is very heterogeneous along firm dimensions and by case particularities. Firms that depend more on trade finance instruments are more strongly affected, while prior experience in the sanctioned country considerably softens the blow of sanctions, and firms can be partly immune to the sanctions effect if they are specialized in serving “crisis countries”. Finally, we find suggestive evidence for sanctions avoidance by exporting indirectly via neighboring countries.