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Sanctions and Export Deflection: Evidence from Iran

CID Research Fellow & Graduate Student Working Paper No. 80

Jamal Ibrahim Hader
January 2017

Abstract:

Do export sanctions cause export deflection? Data on Iranian non-oil exporters between January 2006 and June 2011 shows that two-thirds of these exports were deflected to non-sanctioning countries after sanctions were imposed in 2008, and that at this time aggregate exports actually increased. Exporting firms reduced prices and increased quantities when exporting to a new destination, however, and suffered welfare losses as a result.

Keywords: sanctions; trade policy; globalization; export deflection; Iran

JEL codes: F13; F14; F15; F21; F5; F6

Affiliated Program: Growth Lab