A gravity analysis of the adverse effects of U.S. sanctions and their after-life

Abstract: Sanctions have become a frequently used tool of political interactions around the globe, and the U.S. is he leading countries when it comes to imposing economic sanctions. While the intention of economic sanctions is to put pressure on the target to alter its behaviour, research has shown that economic sanctions can have negative effects even on the sender country. Utilising a difference-in-differences approach in a gravity framework, we find evidence of adverse effects of multilateral sanctions on U.S. exports but rather inconclusive results for sanctions in large. As a second estimation focus, we investigate whether the adverse effects linger after the sanctions haven been terminated. That is, do sanctions continue to dampen U.S. exports even after they have been lifted? Our results indicate lingering adverse effects of sanctions and multilateral sanctions up to six years after they have been terminated.