On the basis of a single-period, guns-versus-butter, complete-information model in which two agents dispute control over an insecure portion of their combined output, we study the choice between a ...peace agreement that maintains the status quo without arming (or unarmed peace) and open conflict (or war) that is possibly destructive. With a focus on outcomes that are immune to both unilateral deviations and coalitional deviations, we find that, depending on war's destructive effects, the degree of output security and the initial distribution of resources, peace can, but need not necessarily, emerge in equilibrium. We also find that, while ex ante resource transfers without commitment can improve the prospects for peace, war remains the unique equilibrium in pure strategies when the initial distribution of resources is sufficiently uneven.
On the basis of a single-period, guns-versus-butter, complete-information model in which two agents dispute control over an insecure portion of their combined output, we study the choice between a ...peace agreement that maintains the status quo without arming (or unarmed peace) and open conflict (or war) that is possibly destructive. With a focus on outcomes that are immune to both unilateral deviations and coalitional deviations, we find that, depending on war’s destructive effects, the degree of output security and the initial distribution of resources, peace can, but need not necessarily, emerge in equilibrium. We also find that, ex ante resource transfers without commitments can improve the prospects for peace, but only when the configuration of parameters describing the degree of output security and the degree of war’s destruction ensure the possibility of peace without such transfers at least for some sufficiently even initial resource distributions.
We construct a three-country, two-bloc, multi-product trade model in which tariff agreements between customs union members are binding whereas inter-bloc tariff agreements are self-enforcing. Our ...main objective is to explore how the liberalization of trade between customs union members (i.e. the deepening of regional integration) affects the sustainability of tariff agreements with the rest of the world (ROW). We derive conditions under which Kemp–Wan Kemp, M.C. and H. Wan, Jr., 1976, An elementary proposition concerning the formation of customs unions, Journal of International Economics 6, 95–97 adjustments in the external tariffs of union members result in self-enforcing tariff agreements with ROW and then use these adjustments to evaluate the general tariff-setting incentives of the two trading blocs.
Do Sanctions Affect Growth? Kwon, Ohyun; Syropoulos, Constantinos; Yotov, Yoto V
IDEAS Working Paper Series from RePEc,
01/2022
Paper
Open access
Direct measures of the economic impact of sanctions are contaminated by the endogeneity that arises when other events in target countries (e.g., civil or interstate conflicts, political independence, ...etc.) instigate the imposition of sanctions. To address this issue, we propose a novel instrument, sender’s aggressiveness, captured by the number of sanctions imposed in a given year. After establishing the validity of this instrument, we quantify the impact of sanctions on growth in sanctioned states and show that, on average, an additional sanction decreases contemporaneous real GDP per capita in target states by 0.39 percent. We also substantiate the presence of a significant (in magnitude) downward bias in the corresponding OLS estimates and demonstrate that the effects of sanctions on growth vary widely depending on the types of sanctions considered, their purported objectives, measures of their success, and the duration of their effects.
Typically, economics assumes that property rights over productive resources or goods are perfectly defined and costlessly enforced. The costs of insecurity and the resultant conflict are, however, ...real and often economically significant. In this paper, we examine how international trade regimes affect the costs of conflict and, in turn, how the desirability of international trade is affected by these costs. We consider both domestic and international conflict. Trade openness reduces the costs of these types of conflict for countries that import goods whose production relies on supplies of contested resources. For countries that export such goods, trade openness intensifies conflict. The effect of conflict on the allocation of productive resources through prices under trade can also explain the “natural resource curse” and can overturn a country’s natural comparative advantage. Finally, we consider alternative channels through which trade can affect arming and conflict costs, with effects that can either improve or worsen international relations.
Taking an interdisciplinary perspective, we examine the evolution of economic sanctions in the post-World War II era and reflect on the lessons that could be drawn from their patterns of use. We ...observe that, during this time, there has been a remarkable increase in the use of sanctions as an instrument of foreign policy. We classify this period into four `eras' and discuss, in this context, how the evolution of sanctions may be linked to salient features of the contemporaneous international political and economic orders. Our review of the literatures on sanctions in economics and political science suggests, among other things, that our understanding of sanction processes could be significantly advanced by marrying these perspectives. We conclude by identifying several questions and challenges, and by discussing how interdisciplinary research could address them.
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