Haishi Li (The University of Hong Kong)
(Trade) War and Peace: How to Impose International Trade Sanctions
WIFO Research Seminar, Österreichisches Institut für Wirtschaftsforschung, Wien, 01.02.2023 12:30, https://tinyurl.com/22xb87cw
Comment: Bettina Meinhart – This lecture will take place at WIFO. However, you can also participate via MS Teams, see link above.
Veranstalter: Österreichisches Institut für Wirtschaftsforschung
Online seit: 13.01.2022 0:00
Trade sanctions are a common instrument of diplomatic retaliation. To guide current and future policy, we ask: What is the most cost-efficient way to impose trade sanctions against Russia? To answer this question, we build a quantitative model of international trade with input-output connections. Sanctioning countries simultaneously choose import tariffs to maximise their income and to minimise Russia's income, with different weights placed on these objectives. We find, first, that for countries with a small willingness to pay for sanctions against Russia, the most cost-efficient sanction is a uniform, about 20 percent tariff against all Russian products. Second, if countries are willing to pay at least 0.7 $ for each 1 $ drop in Russian welfare, an embargo on Russia's mining and energy products – with tariffs above 50 percent on other products – is the most cost-efficient policy. Finally, if countries target politically relevant sectors, an embargo against Russia's mining and energy sector is the cost-efficient policy even when there is a small willingness to pay for sanctions.
Forschungsbereich:Ohne Forschungsgruppenzuordnung