TY - JOUR A1 - Crozet, Matthieu A1 - Hinz, Julian A1 - Stammann, Amrei A1 - Wanner, Joschka T1 - Worth the pain? BT - firms’ exporting behaviour to countries under sanctions JF - European economic review N2 - How do exporting firms react to sanctions? Specifically, which firms are willing — or capable — to serve the market of a sanctioned country? We investigate this question for four sanctions episodes using monthly data on the universe of French exporting firms. We draw on recent econometric advances in the estimation of dynamic fixed effects binary choice models. We find that the introduction of new sanctions in Iran and Russia significantly lowered firm-level probabilities of serving these sanctioned markets, while the (temporary) lifting of the U.S. sanctions on Cuba and the removal of sanctions against Myanmar had no or only small trade-inducing effects, respectively. Additionally, the impact of sanctions is very heterogeneous along firm dimensions and by case particularities. Firms that depend more on trade finance instruments are more strongly affected, while prior experience in the sanctioned country considerably softens the blow of sanctions, and firms can be partly immune to the sanctions effect if they are specialized in serving “crisis countries”. Finally, we find suggestive evidence for sanctions avoidance by exporting indirectly via neighboring countries. KW - sanctions KW - trade KW - foreign policy KW - extensive margin KW - firm behaviour Y1 - 2021 U6 - https://doi.org/10.1016/j.euroecorev.2021.103683 SN - 0014-2921 SN - 1873-572X VL - 134 PB - Elsevier CY - Amsterdam ER - TY - RPRT A1 - Hinz, Julian A1 - Stammann, Amrei A1 - Wanner, Joschka T1 - State Dependence and Unobserved Heterogeneity in the Extensive Margin of Trade T2 - CEPA Discussion Papers N2 - We study the role and drivers of persistence in the extensive margin of bilateral trade. Motivated by a stylized heterogeneous firms model of international trade with market entry costs, we consider dynamic three-way fixed effects binary choice models and study the corresponding incidental parameter problem. The standard maximum likelihood estimator is consistent under asymptotics where all panel dimensions grow at a constant rate, but it has an asymptotic bias in its limiting distribution, invalidating inference even in situations where the bias appears to be small. Thus, we propose two different bias-corrected estimators. Monte Carlo simulations confirm their desirable statistical properties. We apply these estimators in a reassessment of the most commonly studied determinants of the extensive margin of trade. Both true state dependence and unobserved heterogeneity contribute considerably to trade persistence and taking this persistence into account matters significantly in identifying the effects of trade policies on the extensive margin. T3 - CEPA Discussion Papers - 36 KW - dynamic binary choice KW - extensive margin KW - high-dimensional fixed effects KW - incidental parameter bias correction KW - trade policy Y1 - 2021 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-511919 SN - 2628-653X ER -