Always Affecting the Wrong People? The Impact of US Sanctions on Poverty

University of Trier Research Papers in Economics No. 3/15

18 Pages Posted: 7 Apr 2015

See all articles by Matthias Neuenkirch

Matthias Neuenkirch

University of Trier - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute

Date Written: April 6, 2015

Abstract

In this paper, we analyze the effect of US economic sanctions on the target countries’ poverty gap during the period 1978-2011. Econometrically, we employ a nearest neighbor matching approach to account for differences in the countries’ economic and political environment and the likelihood of being exposed to US sanctions. Our results indicate that US sanctions are indeed affecting the wrong people as we observe a 2.3-5.1 percentage points (pp) larger poverty gap in sanctioned countries compared to their nearest neighbors. Severe sanctions, such as fuel embargoes, trade restrictions, the freezing of assets, or embargoes on most or all economic activity are particularly detrimental and lead to an increase in the poverty gap by 6.1-7.4 pp.

Keywords: Economic Sanctions, Nearest Neighbor Matching, Poverty, United States

JEL Classification: F51, F52, F63, I32

Suggested Citation

Neuenkirch, Matthias and Neumeier, Florian, Always Affecting the Wrong People? The Impact of US Sanctions on Poverty (April 6, 2015). University of Trier Research Papers in Economics No. 3/15, Available at SSRN: https://ssrn.com/abstract=2590259 or http://dx.doi.org/10.2139/ssrn.2590259

Matthias Neuenkirch (Contact Author)

University of Trier - Faculty of Economics ( email )

Universitätsring 15
Trier, 54296
Germany
+49 - (0)651 - 201 - 2629 (Phone)

HOME PAGE: http://www.uni-trier.de/index.php?id=50130

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Florian Neumeier

CESifo (Center for Economic Studies and Ifo Institute) - Ifo Institute ( email )

Poschinger Str. 5
Munich, 01069
Germany

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