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GTAP Resource #5116

"Optimal Economic Sanctions"
by Böhringer, Christoph, Michael Ferris and Thomas Rutherford

Economic sanctions are an instrument of political interaction between sovereign states. Threatened or enacted trade sanctions inflict economic damage on target countries in order to influence government behavior. The European Union and the United States of America draw on economic sanctions against Russia as a means to achieve a negotiated and political solution to the Ukrainian crisis while Russia threatens to impose sanctions on Turkey for events in Syria. Trade measures have been suggested as a means of solving the free rider problem for a meaningful international greenhouse gas abatement treaty. We ask the question: Which of these policies could be effective and which may be doomed to failure?

Using an applied general equilibrium model of international trade based on GTAP9 we quantify the economic potential of trade measures as sanctioning instruments. Off the shelf optimization tools are used to compute Nash equilibrium tariffs. Among other findings, we find that tariffs imposed by OECD countries on Russian imports simultaneously raise OECD welfare and hurt the Russian economic with no risk of retaliation. Transfers between OECD member states substantially increase the threat to Russia no-regrets measures.

Resource Details (Export Citation) GTAP Keywords
Category: 2016 Conference Paper
Status: Published
By/In: Presented at the 19th Annual Conference on Global Economic Analysis, Washington DC, USA
Date: 2016
Created: Rutherford, T. (4/19/2016)
Updated: Rutherford, T. (4/19/2016)
Visits: 1,332
- Climate change policy
- Trade and the environment
- Economic crisis

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