Impact of economic sanctions and counter-sanctions on the Russian Federation's trade

Economic sanctions remain a popular tool in international politics and have drawn the attention of economists, policy makers and the public. In this study, we examine the impact of economic sanctions imposed by Western countries on the exports of the Russian Federation (RF) and the impact of counter-sanctions responded by the RF on its import. We use the data from 49 trading partners of the RF from 2011 to 2018 and employ a gravity modelling approach, which allows us to undertake differences-indifferences estimations to identify the causal effects of sanctions and counter-sanctions. We find that (i) economic sanctions against and counter-sanctions from the RF lead to declines in both aggregate export and import values of the RF. The sanctions cause a decline of 25.25% of the export values of the RF to, while counter-sanctions cause a decline of 25.92% of the RF's import values from sanctions sending countries; (ii) the effects of sanctions and counter-sanctions are not homogeneous among export and import products. The sanctions severely affect the RF's export of oil products with a reduction of about 36.56% of the export value while the effects of the sanctions on the RF's export of non-oil products are insignificant. Meanwhile, the counter-sanctions cause a decline in the import value of agro products by 54.52% and a decline in the import value of non-agro products by 20.86%. The decline in export and import indicates that these non-tariff barriers are harmful to both the RF and the countries imposing sanctions. (C) 2021 Economic Society of Australia, Queensland. Published by Elsevier B.V. All rights reserved.