This paper provides novel empirical results on the welfare impact of sanctions when countries coordinate their sanctions packages. To do so, weconduct simulations with the Caliendo and Parro (2015) CGE model of the world economy that provides changes in welfare under different hypothetical setups of sanctions coalitions. Focusing on the 2012 wave of sanctions against Iran and the 2014 sanctions againstRussia, we find that coalitions serve two important purposes. First, they can magnify the coercive force of sanctions regimes by raising the welfare losses incurred by targeted nations. Second, they can reduce the welfare losses borne by individual sanctioningstates such as when the coalition moves towards deeper economic cooperation. Finally, the paper examines which third-party countries would need to be brought on board as prospective allies to reduce sanctions-busting and amplify the deterring effect of sanctions
Joint work with Julian Hinz (Bielefeld University) and Katrin Kamin (Kiel Institute).
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