SESSION III - The economics of international sanctions

ABSTRACT: After a wave of globalization following the end of the Cold War, trade wars and financial sanctions have become frequent tools of international policymaking over the last ten years. This renewal has led to an increased interest in the welfare and allocative consequences, and more generally the overall effectiveness of international sanctions. We show that Lerner (1936) symmetry provides an important benchmark for this analysis with import and export sanctions equivalent in terms of their effects on allocations and welfare. However, this abstracts from several practical issues, including the interaction between trade and financial sanctions, and the effects of sanctions on the financial sector, which we address in this paper.