Julian Hinz will present "Shooting down trade: Firm-level effects of embargoes" (co-authored with Ugur Aytun and Cem Özgüzel).

In November 2015, Turkey unexpectedly downed a Russian military jet in Syria. Russia retaliated by imposing a sudden and complete embargo on certain Turkish exports effective within a month. The paper exploits this quasi-natural experiment to estimate the supply side effects of imposing and lifting the sanctions. Using administrative data covering all Turkish exporters, the authors first document the trade effects on the intensive margin of firms. They consider the direct embargo impact, diversion effects to other destinations, and circumvention effects towards other products. Second, the paper investigates the broader consequences of sanctions on firms’ domestic sales, purchases, and employment, uncovering significant and lasting impacts beyond trade outcomes. The authors find that affected firms face a permanent scarring effect directly related to the embargo.

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