Holger Görg (Kiel Institute, Kiel University)
In this paper, we use a novel firm-level dataset for Germany to investigate the effect of sanctions on the trade activity of German firms. More specifically, we look at the economic sanctions imposed by the EU against Russia in 2014 in response to the annexation of Crimea as well as Russia’s countermeasures. Using monthly data on export volume and price for products exported by the same firm to Russia and to other countries allows us to identify the differential response of firms to the conflict and the associated sanctions. We find a substantial negative effect on the volume of exports and the number of products traded. The effects are heterogeneous along various dimensions. First, exports of products directly affected by the sanctions decline – unsurprisingly – more strongly than exports of non-sanctioned products. However, the latter also fall significantly emphasizing the role of uncertainty and political instability for the firms’ export decision. Second, we find that exports of natural resources are less affected than exports of processed goods. And third, we document heterogeneous responses by firm characteristics. For example, we find that small firms reduce their exports less than larger firms. The sanctions also reduced the probability of serving the Russian market at all.
Holger Görg (Kiel Institute, Kiel University) – Anna Jacobs (Kiel Institute, Bielefeld University) – Saskia Meuchelböck (Kiel Institute)
Lecture Hall (A-032)