Unintended Transnational Effects of Sanctions: A Global Vector Autoregression Simulation

Emre Hatipoglu (Lead / Corresponding author), Jennifer Considine, Abdullah AlDayel

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)
82 Downloads (Pure)

Abstract

The debate on unintended consequences of sanctions, such as their adverse effects on human rights, public health, or the economy beyond intended sectors in the target state, has become increasingly popular over the last couple of decades. Interestingly, however, this debate has mostly overlooked the transnational aspects of these unintended consequences. This study examines one such aspect, namely the economic spillover of sanctions to neighboring countries. Our global vector autoregression oil and inventory model (GOVAR) simulations on Indonesia, a medium-level oil producer, indicate sanctions may spill over to its neighbors’ domestic economy. The risk and nature of spillover varies with respect to the type of sanctions employed, timing of sanctions, and the macroeconomic indicator in the neighboring state in question. Equity markets appear especially susceptible to a contagion effect. Understanding how a sanction spills over to neighboring states can help sender states design sanctions that minimize regional disruptions.

Original languageEnglish
Pages (from-to)863-879
Number of pages17
JournalDefence and Peace Economics
Volume34
Issue number7
Early online date11 May 2022
DOIs
Publication statusPublished - 3 Oct 2023

Keywords

  • Economic sanctions
  • economic interdependence
  • international trade
  • spillover effects

ASJC Scopus subject areas

  • Economics and Econometrics
  • Social Sciences (miscellaneous)

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