government education expenditures in early and late childhood human capital investment in early childhood can lead to large and persistent gains beyond this window of opportunity human capital accumulation is more costly despite compelling evidence in support of this notion government education spending is allocated disproportionately toward late childhood and young adulthood we consider the consequences of a reallocation using an overlapping generations model with private and public spending on early and late childhood education taking as given the higher returns to early childhood investment we find that the current allocation may nonetheless be appropriate when we consider a homogeneous population this can hold for moderate levels of government spending with heterogeneity this can hold for middle income workers lower income workers by contrast may benefi tf rom a reallocation

conform or challenge adjustment strategies of sanction torn companies the literature on sanctions often neglects the role of domestic firms in sender states although sanctions only have a real economic effect when senders firms reduce their activities on the target s market in contrast sanctions avoidance and increasing investments in the target country the observed behaviour of many companies facing the eu sanctions against russia imposed in 2014 mitigate the impact of these restrictive measures while sanctions increase the political risk for companies they also offer economic opportunities and previous studies could not settle the debate on which factor prevails by evaluating responses from british french german italian and polish enterprises to an online survey distributed in 2017 we analyse at the firm level how sanction torn companies adjust to new political orders and what drives their strategic decisions we find evidence that resource dependency induces strategies that challenge sanction policies in particular non fungible assets in the target country incentivise companies to further increase their engagement these defiance strategies diminish the real economic effect of sanctions and generate a new economic equilibrium which has negative long term implications on the choice set of policymakers to further pursue the imposition of sanctions and which even outlasts the lifting of these restrictive measures

bargaining enforcement and multilateral sanctions when is cooperation counterproductive scholars and policymakers generally assume that multilateral cooperation is a necessary condition for economic sanctions to be of any use however previous statistical tests of this assumption have shown that sanctions are more successful with lower levels of cooperation this puzzle calls into question established theories of economic statecraft as well as theories of international cooperation in this article i test possible explanations for the ineffectiveness of multilateral cooperation on sanctions events using james fearon s 1998 breakdown of cooperation into bargaining and enforcement phases as a framework for discussion the empirical results show that when multilateral economic sanctions fail their failure is due to enforcement not bargaining problems without the support of an international organization cooperating states backslide from promises of cooperation backsliding occurs because of domestic political pressures and uncertainty about the intentions of the other sanctioning countries backsliding causes an initial burst of cooperative behavior to decay over time without institutional support cooperation is worse than useless it is counterproductive this result suggests that international cooperation is a more fragile equilibrium than previously thought but undercuts realist arguments that international organizations are unimportant

ethnicity neighborhoods and human capital externalities the socioeconomic performance of today s workers depends not only on parental skills but also on the average skills of the ethnic group in the parents generation or ethnic capital this paper investigates the link between the ethnic externality and ethnic neighborhoods the evidence indicates that residential segregation and the external effect of ethnicity are linked partly because ethnic capital summarizes the socioeconomic background of the neighborhood where the children were raised ethnicity has an external effect even among persons who grow up in the same neighborhood when children are exposed frequently to persons who share the same ethnic background copyright 1995 by american economic association

borrowing constraints human capital accumulation and growth abstract borrowing constraints increase aggregate savings and therefore may increase growth this paper argues however that by reducing human capital accumulation borrowing constraints also have negative effects on growth these effects are discussed in an overlapping generations model with endogenous growth empirical evidence for oecd and developing countries lend support to the main predictions of the model

vulnerability to terrorist attacks in european electricity decarbonisation scenarios comparing renewable electricity imports to gas imports the decarbonised future european electricity system must remain secure reliable electricity supply is a prerequisite for the functioning of modern society scenarios like desertec which partially rely on solar power imports from the middle east and north africa may be attractive for decarbonisation but raise concerns about terrorists interrupting supply by attacking the long unprotected transmission lines in the sahara in this paper i develop new methods and assess the european vulnerability to terrorist attacks in the desertec scenario i compare this to the vulnerability of today s system and a decarbonisation scenario in which europe relies on gas imports for electricity generation i show that the vulnerability of both gas and electricity imports is low but electricity imports are more vulnerable than gas imports due to their technical characteristics gas outages and potentially resulting blackouts are the very unlikely consequence even of very high number attacks against the gas import system whereas short blackouts are the potential consequence of a few attacks against the import electricity lines as the impacts of all except extreme attacks are limited terrorists cannot attack energy infrastructure and cause spectacular fear creating outages both gas and electricity import infrastructure are thus unattractive and unlikely terrorist targets

the global sanctions data base abstract this article introduces the global sanctions data base gsdb a new dataset of economic sanctions that covers all bilateral multilateral and plurilateral sanctions in the world during the 1950 2016 period across three dimensions type political objective and extent of success the gsdb features by far the most cases amongst data bases that focus on effective sanctions i e excluding threats and is particularly useful for analysis of bilateral international transactional data such as trade flows we highlight five important stylized facts i sanctions are increasingly used over time ii european countries are the most frequent users and african countries the most frequent targets iii sanctions are becoming more diverse with the share of trade sanctions falling and that of financial or travel sanctions rising iv the main objectives of sanctions are increasingly related to democracy or human rights v the success rate of sanctions has gone up until 1995 and fallen since then using state of the art gravity modeling we highlight the usefulness of the gsdb in the realm of international trade trade sanctions have a negative but heterogeneous effect on trade which is most pronounced for complete bilateral sanctions followed by complete export sanctions

inspiration coalition and substitution external influences on postcommunist transformations there has been a recent explosion of interest in the external influences on the political and economic transformations of postcommunist states this article consolidates several analytical advances in this literature and distills three main functions of external actors namely to lengthen the time horizons of postcommunist politicians to expand the circle of interested reformers and to deter opponents of reform the article argues that a focus on external influences is a growth area for good conceptual work only if it addresses the union of foreign and domestic influences rather than treating them as stylized alternative explanations the central point is that outside actors should be considered as striving to influence the choices of existing domestic actors with whom they can be seen to form a kind of informal coalition at bottom outsiders do best through a combination of strategies strengthening domestic actors already committed to their approach winning over new domestic actors to their priorities and preventing the unconvinced from obstructing reforms

bilateralism and free trade we study a setting with many countries in each country there are firms that can sell in the domestic as well as foreign markets countries can sign bilateral free trade agreements that lower import tariffs and thereby facilitate trade we allow a country to sign any number of bilateral free trade agreements a profile of free trade agreements defines the trading regime our principal finding is that in symmetric settings bilateralism is consistent with global free trade we also explore the effects of asymmetries across countries and political economy considerations on the incentives to form trade agreements

an optional permit system for global pollution control abstract this paper describes an optional permit system to control global environmental pollution the proposed scheme serves as an appropriate incentive to induce each country to adopt globally optimal behavior under asymmetric information where some world agency has no information about the pollution production functions of countries

early childhood education and economic growth abstract we study the effects of early childhood skill formation on productivity and schooling we add early childhood human capital to a standard continuous time life cycle economy and assume complementarity between educational stages agents are homogenous and choose the intensity of preschool education how long to stay in formal school labor effort and consumption the model is calibrated to the us from 1961 to 2008 and matches the data very well and closely reproduces the paths of schooling hours worked relative prices and gdp we find that early childhood education can explain a large part of the observed increase of years of schooling in the u s since 1961 and it was as important as formal education for the increase of labor productivity in the period furthermore we show that small reallocations of public expenditures from formal education to early childhood education would have sizable impacts on income per capita and productivity

uncertain altruism and investment in children the authors discuss the concept of parental uncertainty about their childrens altruism and the consequences for investment in childrens human capital in this paper we show that if parents are uncertain about their childrens altruism but are at least sure that they will receive some support from their children then the unique optimal investment is the efficient one uncertainty over the exact level of the retirement gift does not alter the conclusion of the perfect certainty case even when parents are risk averse alternatively parents may not know enough about their childrens altruism to feel completely confident that some gift will be forthcoming regardless of the size of their investment under this assumption we show that the optimal investment must be less than the efficient amount excerpt

chasing phantoms the political economy of ustr trade barriers though usually considered welfare reducing are globally ubiquitous in light of the enormous clash between what is and what ought to be researchers have begun addressing the question of why countries so consistently pursue such apparently counterproductive policies

optimal environmental regulation under asymmetric information abstract a market model of environmental regulation with interdependent production and pollution abatement costs and heterogeneous firms is developed firms have private information about costs which have a quadratic form firms pursue bayes nash strategies in communication with the regulator the full information optimum cannot be attained unless gains from trade in the product market net of external damages exceed the information rents earned by firms aggregate output and externality levels are lower at the regulated equilibrium than at the full information social optimum

international sanctions as international punishment much of the contemporary literature on the utility of international sanctions approaches the apparent riddle of why sanctions are embraced so eagerly when they are supposedly such an ineffective tool of statecraft by focusing on the instrumental and rational purposes of sanctions as a result one purpose that does not always lend itself to a rational means end calculus the purpose of punishment tends to be overlooked or more commonly dismissed outright this article explores punishment as both a useful and an effective purpose of international sanctions it argues not only that sanctions should be distinguished from other forms of hurtful statecraft but also that they are a form of international punishment for wrongdoing despite the difficulties of applying the term punishment in the context of international relations the article then examines the purposes of punishment and reveals that only some are understandable when a model of means end rationality is used suggesting that the element of the nonrational also plays an important role in international sanctions the argument is then applied to the case of u s sanctions imposed after the soviet union s invasion of afghanistan to demonstrate the different purposes of punishment at work in this case the article concludes that just as we cannot understand punishment as a purposive human activity solely by reference to a rational model of a means to a clearly delineated end so too we cannot entirely understand sanctions as a form of international punishment by an attachment to a rational model of policy behavior however some forms of punishment are exceedingly effective and this may explain why sanctions continue to be a popular instrument of statecraft

strategic interaction and the statistical analysis of international conflict although strategic interaction is at the heart of most international relations theory it has largely been missing from much empirical analysis in the field typical applications of logit and probit to theories of international conflict generally do not capture the structure of the strategic interdependence implied by those theories i demonstrate how to derive statistical discrete choice models of international conflict that directly incorporate the theorized strategic interaction i show this for a simple crisis interaction model and then use monte carlo analysis to show that logit provides estimates with incorrect substantive interpretations as well as fitted values that can be far from the true values finally i reanalyze a well known game theoretic model of war bueno de mesquita and lalman s 1992 international interaction game my results indicate that there is at best modest empirical support for their model

production and innovation when techniques are tacit the case of education abstract the central theme of this paper is that the conventional economic theory of production does not hold even approximately in a field like education after examining the result of input output studies in education and the effect of government attempts to enhance education effectiveness we provide a sketch of a new production theory for sectors where techniques are poorly articulated and idiosyncratic

on the determinants of the success of economic sanctions an empirical analysis theory theories predicting the success of economic sanctions are tested on the universe of sanction episodes from 1914 to 1989 hypotheses the probability of success depends upon the cost to the target nation the extent of trade linkages between target and sender the stability of the target the amount of time sanctions are in force and whether financial sanctions are utilized method data are analyzed using logistic regression results the factors affecting success depend upon the goals of the sending nations when that goal is simply destabilization the principal determinant of success is the initial stability of the target for other goals the use of financial sanctions is most effective we also find evidence of a modest downward trend over time in the relative effectiveness of sanctions in the latter category

oil and resource backed aggression a common misperception about oil politics is that it has a uniform monolithic effect on policy development this paper argues that in fact the net political effect of oil varies dramatically depending on the nature of the petrostate it shows that oil income when combined with revolutionary governments in petrostates generates strong incentives for foreign policy aggression and international conflict the aggressiveness of petro revolutionary states is shown to have consequences in both military and economic spheres of international relations militarily the aggressiveness of this type of state leads to a high rate of armed conflicts economically the aggressiveness of petro revolutionary states shapes global oil markets and international economic relations the argument is tested using statistical analysis of international conflicts and economic sanctions the policy implications are then considered focusing on the negative global impacts of dependence on oil consumption

government policies market imperfections and foreign direct investment the internalization eclectic theory of foreign direct investment includes the important insight that government policies create market imperfections which make foreign direct investment an economically rational strategic alternative for firms this paper reexamines the effects of government policies on market imperfections and foreign direct investment fdi it broadens and refines the analysis of the impact of government policies by developing the following arguments 1 there is a wide range of government policies that affect firms fdi decisions via their effects on market imperfections 2 there are numerous dimensions of variability in government policies that need to be identified in order to understand fully the effects of government policies on market imperfections and hence fdi flows 3 some of the effects of government policies on market imperfections and fdi are the opposite of those previously noted in the fdi literature 4 the effects of government policies vary across the several individual components of fdi flows the paper thus examines the following variables and relationships more extensively and precisely than has the previous literature government policy variables as causal factors affecting fdi market imperfection variables as intervening factors in the causal connections between government policies and fdi and the multiple indicators of the various dimensions of fdi as dependent variables

schooling and economic well being the role of nonmarket effects standard estimates of the economic value of additional schooling based on earnings differences associated with differences in the level of schooling attained cover only a portion of the total effects of education that are valued by citizens we first identify a catalog of nonmarketed effects many of which have been recently studied by economists and then propose a procedure for estimating a willingness to pay value for these effects using empirical estimates of the magnitude of a selection of these effects found in the literature we calculate willingness to pay values using our proposed procedure these illustrative calculations suggest that standard estimates of the benefit of incremental schooling substantially understate the full value of such investments

ostracism and forgiveness many communities rely upon ostracism to enforce cooperation if an individual shirks in one relationship her innocent neighbors share information about her guilt in order to shun her while continuing to cooperate among themselves however a strategic victim may herself prefer to shirk rather than report her victimization truthfully if guilty players are to be permanently ostracized then such deviations are so tempting that cooperation in any relationship is bounded by what the partners could obtain through bilateral enforcement ostracism can improve upon bilateral enforcement if tempered by forgiveness through which guilty players are eventually readmitted to cooperative society

returns to education a further international update and implications this paper updates evidence on the returns to investment in education by adding estimates for new countries and refining existing estimates to bring the total number of country cases to over 60 the new cross country evidence confirms and reinforces earlier patterns namely that returns are highest for primary education the general curricula the education of women and countries with the lowest per capita income the findings have important implications for directing future investment in education which for efficiency and equity purposes should concentrate on these priority areas

a theory of buyer seller networks this paper introduces a new model of exchange networks rather than markets of buyers and sellers it begins with the empirically motivated premise that a buyer and seller must have a relationship a link to exchange goods networks buyers sellers and the pattern of links connecting them are common exchange environments this paper develops a methodology to study network structures and explains why agents may form networks in a model that captures characteristics of a variety of industries the paper shows that buyers and sellers acting strategically in their own self interests can form the network structures that maximize overall welfare

oligopolistic incentives for pollution control with nonzero conjectures abstract this paper presents an oligopolistic tax subsidy scheme for pollution control which incorporates nonzero conjectures to characterize correct incentives for situations where nonzero conjectures are formed by the polluters with respect to others pollution generating activities

public budget composition fiscal de centralization and welfare we study the optimal degree of fiscal decentralization in a dynamic federal economy where governments decide on budget size and its allocation between public education and infrastructure spending we find that full centralization of tax and expenditure policies is optimal when infrastructure productivity is similar across regions when differences are not too large partial centralization is optimal with strong differences full decentralization becomes optimal national steady state output tends to be highest under full decentralization we provide a justification for the mixed evidence regarding the oates conjecture by showing that full dominates partial decentralization despite being inferior to complete decentralization on etudie le degre optimal de decentralisation fiscale dans une economie federale dynamique ou les gouvernements decident de la taille du budget et de son allocation entre les depenses en education publique et en infrastructures on decouvre qu une pleine centralisation des taxes et des depenses est optimale quand la productivite des infrastructures est la meme dans toutes les regions quand les differences ne sont pas trop importantes une centralisation partielle est optimale en presence de fortes differences la pleine decentralisation est optimale la production nationale en regime permanent tend aetre la plus elevee quand il y a pleine decentralisation on fournit une justification pour les resultats mixtes obtenus quant a la conjoncture de oates en montrant que la pleine decentralisation est preferable a la decentralisation partielle meme si elle est inferieure a la decentralisation complete

trading human rights how preferential trade agreements influence government repression a growing number of preferential trade agreements ptas have come to play a significant role in governing state compliance with human rights when they supply hard standards that tie material benefits of integration to compliance with human rights principles ptas are more effective than softer human rights agreements hras in changing repressive behaviors ptas improve members human rights through coercion by supplying the instruments and resources to change actors incentives to promote reforms that would not otherwise be implemented i develop three hypotheses 1 state commitment to hras and 2 ptas supplying soft human rights standards not tied to market benefits do not systematically produce improvement in human rights behaviors while 3 state commitment to ptas supplying hard human rights standards does often produce better practices i draw on several cases to illustrate the processes of influence and test the argument on the experience of 177 states during the period 1972 to 2002 i would like to thank mike colaresi dan drezner david lake lisa martin walter mattli john meyer mark pollack erik voeten jim vreeland and two anonymous reviewers for their detailed and thoughtful comments on various drafts of this manuscript as well as the many other people who have helped me by asking hard questions along the way i would also like to thank michael barnett charles franklin and jon pevehouse for advice during the dissertation research that supports this article and alexander h montgomery for assistance in data management all faults are my own for generous assistance in the collection of data i thank the national science foundation ses 2cdz414 and ses 0135422 john meyer and francisco ramirez for support during the writing of the article i thank nuffield college at oxford university and most importantly lynn eden and stanford s center for international security and cooperation

interests power and multilateralism multilateralism characterizes to varying degrees patterns of interaction among states and the formal organizations they construct the utility of multilateral norms or organizations varies with the type of cooperation problem states confront thus the functional logic of international cooperation leads to hypotheses about the conditions under which the institution of multilateralism may be a feasible and efficient solution as in coordination problems and those under which it will not as in collaboration problems within these constraints powerful states choose institutions that will serve their interests with multilateral arrangements becoming more attractive as the future is valued more highly multilateral institutions should be stable in circumstances of changing distributions of power relative to more hierarchical institutions the vulnerability of patterns of international cooperation to various exogenous changes depends on the type of strategic interaction underlying state behavior

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

religions fertility and growth in south east asia through indirect inference we investigate the extent to which religions supposed pronatalism is detrimental to growth via the fertility education channel using censuses from south east asia we first estimate an empirical model of fertility and show that having a religious affiliation significantly raises fertility this effect is stronger for couples with intermediate to high education levels we next use these estimates to identify the parameters of a structural model of fertility choice on average catholicism is the most pro child religion increasing spending on children followed by buddhism while islam has a strong pro birth component redirecting spending from quality to quantity we show that pro child religions depress growth in the early stages by lowering saving physical capital and labor supply these effects account for 10 to 50 of the actual growth gaps between countries over 1950 1980 at later stages of growth pro birth religions lower human capital accumulation explaining between 10 and 20 of the gap between muslim and buddhist countries over 1980 2010

theocracy and resilience against economic sanctions abstract this paper provides a simply theory to explain the impact of sanctions on a regime s policies and behavior sanctions are generally put to strip the target country from its available rents and weaken the government s stance against growing discontent in the population we show however that sanctions may give legitimacy to an incumbent government by influencing the optimal level of religious ideology provided by the state and further stabilizing its grip to power and rents while in a good state of nature sanctions build resilience as long as religious ideology among the population is strong at bad times they compel the target country to move towards ideological moderation in a world of asymmetric information the target country always finds it optimal to send a signal that truly represents the prevailing state of nature in order to induce learning and reach a win win outcome

sanctions in networks the most unkindest cut of all the extensive literature on sanctions has mainly focused on a dyadic interaction between sender and target in contrast this paper examines sanctions when the sender and target are embedded in a network of linkages to other agents the sender can assemble a sanctioning coalition of neighbors to sever their links execute multi link cuts to the target and her allies efficacy of sanctions is now crucially dependent on the network architecture we characterize the structural properties of networks in which a sender can effectively sanction a target in the short run when links can only be deleted and the long run when links can be both deleted and added

cooperation with network monitoring this paper studies the maximum level of cooperation that can be sustained in perfect bayesian equilibrium in repeated games with network monitoring where players observe each other s actions either perfectly or not at all the foundational result is that the maximum level of cooperation can be robustly sustained in grim trigger strategies if players are equally well monitored comparative statics on the maximum level of cooperation are highly tractable

sanctions some simple analytics governments often seek influence beyond their borders one way is through what thomas schelling 1960 1966 calls brute force taking direct physical control less extreme methods are to promise rewards for taking desired actions or to threaten punishments for not carrying them out sanctions sanctions involve two parties the sender and the target to help identify pronouns antecedents we consider a feminine sender and masculine target the sender s objective is to influence the target by threatening to impose some measure against him for acting contrary to her interest sanctions have long been important in international relations athens imposed a trade embargo against megara ultimately setting off the peloponnesian war 431 404 bc sanctions are central to such international agreements as the united nations charter the world trade organization and the montreal protocol governing chlorofluorocarbons u s law prescribes the use of sanctions in circumstances related for example to national security human rights intellectual property and international trade do sanctions actually achieve senders objectives a common claim is that they usually fail and are costly to senders recent u s legislation proposes to limit unilateral u s sanctions except trade related ones on the grounds that they cost more than they are worth history provides examples of sanctions that were costly and ineffectual such as the league of nations sanctions against the italian occupation of abyssinia or u s sanctions against cuba united nations sanctions against iraq remain in place having achieved less than full success to say the least see gary hufbauer et al 1990 more systematic studies suggest that sanctions often do succeed particularly when objectives are modest hufbauer et al 1990 examine 116 episodes of sanctions with military or political objectives deeming about one third successful sanctions imposed under u s trade law have worked even better about three fourths of the time see e g sykes 1992 thomas bayard and kimberly a elliott 1994 elliott and j david richardson 1997 here we develop a simple framework to explain how sanctions can worl and what is required for them to succeed our framework exploits advances in the theory of repeated games and bargaining under incomplete information while a game theorist would recognize the flavor of our results the setting here is a fresh one 2 we find success more likely when the threatened measure costs the sender little relative to the gain from modifying the target s behavior while the damage to the target is large relative to his cost of complying with the sender s will results consistent with both intuition and empirical evidence as well as with adam smith 1776 book iv ch i moreover a more patient sender is more likely to succeed while the target s patience can work to the sender s disadvantage 3

domestic opposition and signaling in international crises this article explores the effect of domestic political competition on the escalation of international crises it combines an incomplete information model of crisis bargaining with a simple model of two party electoral choice one state has two strategic actors a government and an opposition party both of which declare openly whether they support the use of force to alter the status quo the rival state updates its beliefs and selects its strategy in response to both signals the parties payoffs depend upon a retrospective evaluation by the domestic electorate the model shows that the inclusion of a strategic opposition party decreases the ex ante probability of war by helping to reveal information about the state s preferences this finding has important implications for research on democracy and international conflict since it suggests a mechanism through which democratic states can overcome informational asymmetries which have been identified as a central obstacle to negotiation

how many hands to make sanctions work comparing eu and us sanctioning efforts abstract one of the core disputes in the literature on economic statecraft addresses the conditions under which multilateral sanctions are more successful than unilateral ones our game theoretic model implies that extant assessments do not sufficiently differentiate between the varying abilities of multilateral and unilateral senders in credibly threatening and carrying out sanctions we introduce a selection argument that focuses on the complex decision making process of the european union eu to impose sanctions in comparison to the united states us the institutional structure of the eu and conflicting economic interests of multiple principals make the imposition of sanctions much more difficult in addition the international organization is less accountable vis a vis the voters both mechanisms render sanction threats by the eu less credible since the united states as a unilateral sender can issue more credible sanction threats imposed us sanctions are a negative selection of cases and thus less successful than restrictive measures imposed by the eu we test these propositions with a new dataset on threatened and imposed sanctions by the european union and the united states for the period between 1989 and 2015 the empirical evidence demonstrates that eu sanctions are indeed more successful than those by the us in contrast us sanction threats are more successful than those by the eu we provide evidence for the difficulties of multilateral senders to impose sanctions by showing that eu sanctions are both less likely and less severe the more varied the economic links of the multilateral sender with the sanctioned state are

are smart sanctions feasible this article reviews the literature on the smart sanctions approach developed in the late 1990s in response to the failure of conventional sanctions and questions the efficacy of this instrument smart sanctions modify the conventional sanctions tool by targeting the culpable political elites by means of arms embargoes financial sanctions and travel restrictions and by cushioning vulnerable groups children women the infirm and the elderly by exempting specified commodities such as food and medical supplies from embargoes this two pronged sanctions approach is designed to hit the real perpetrators directly and spare potential innocent victims thus leading to the speedier change of sanctionee behavior although the special design of smart sanctions may seem logically compelling and politically attractive this article argues that the numerous operational problems involved combined with the intricacies of the political processes of the un security council will make a smart sanctions regime difficult to establish and enforce effectively

does high income promote democracy the authors construct a statistical model with which to test whether the regularity that democracy is more commonly found among wealthy countries stems from a democratizing effect of high income or is due entirely to other factors such as the historical context various features of the institutional setting and simultaneity with the process of leadership change even after correcting for these many other influences the democratizing effect of income remains as a statistically significant factor promoting the emergence of democratic political institutions the authors go on to find that leaders risks of losing power rise during their time in office and that these risks are higher in more democratic countries the authors confirm the finding by burkhart and lewis beck that the democracy promoting effect of income is stronger among the european countries they suggest that high income has a more powerful democratizing effect among the southern european countries because it interacts with pressure from major trading partners to democratize this suggests a revaluation of policies designed to foster the replacement of authoritarian regimes by democratic ones through free trade

does school quality matter returns to education and the characteristics of public schools in the united states this paper estimates the effects of school quality measured by the pupil teacher ratio average term length and relative teacher pay on the rate of return to education for men born between 1920 and 1949 using earnings data from the 1980 census we find that men who were educated in states with higher quality schools have a higher return to additional years of schooling rates of return are also higher for individuals from states with better educated teachers and with a higher fraction of female teachers holding constant school quality measures however we find no evidence that parental income or education affects average state level rates of return

distinguishing characteristics of degrees of success and failure in economic sanctions episodes this paper uses 104 episodes from the hufbauer et al 1985 1990 dataset to examine the correlates of classes of outcomes of economic sanctions the parsimonious equations presented identify the characteristics of sanctions episodes conducive to success rather than marginal success and the characteristics productive of failure rather than marginal failure failure is most likely if there is significant third party assistance to the target and if the pre existing trade linkage between sender and target is small success is most easily achieved when the objective is not classified as modest and when pre sanction relations between sender and target are cordial or neutral the equations presented overcome data and methodological flaws of earlier studies exhibit reasonable predictive accuracy and satisfy a battery of tests of statistical significance hypothesized coefficient sign goodness of fit high likelihood and informational efficiency

does issue linkage work evidence from european alliance negotiations 1860 to 1945 though scholars widely claim that issue linkage the simultaneous negotiation of multiple issues for joint settlement can help states conclude international agreements there exist some notable skeptics resolving this debate requires empirical evidence however beyond a few case studies there exists no direct and systematic evidence that issue linkages actually increase the probability of agreement i address this lack of direct and systematic evidence by combing original data on failed alliance negotiations with data from the alliance treaty obligations and provisions atop database using matching techniques i find that for alliance negotiations between 1860 to 1945 offers of trade linkage did substantially increase the probability of agreement besides confirming issue linkage s ability to help clinch an agreement this article s research design and evidence have far reaching implications for the study of negotiations and alliances the research design illustrates the value of considering the dogs that didn t bark as it identifies both successful and failed negotiations the article s evidence explains the high rate of alliance compliance identified by previous scholars and highlights a need to rethink the alliance formation process

rationalist explanations for war realist and other scholars commonly hold that rationally led states can and sometimes do fight when no peaceful bargains exist that both would prefer to war against this view i show that under very broad conditions there will exist negotiated settlements that genuinely rational states would mutually prefer to a risky and costly fight popular rationalist and realist explanations for war fail either to address or to explain adequately what would prevent leaders from locating a less costly bargain essentially just two mechanisms can resolve this puzzle on strictly rationalist terms the first turns on the fact that states have both private information about capabilities and resolve and the incentive to misrepresent it the second turns on the fact that in specific strategic contexts states may be unable credibly to commit to uphold a mutually preferable bargain historical examples suggest that both mechanisms are empirically plausible

when are sanctions effective a bargaining and enforcement framework although a considerable literature identifies the conditions under which sanctions are more likely to be successful few studies examine the question of when sanctioning states or senders are willing to enforce their sanctions laws against their firms using a game theoretic model we argue that imposing sanctions creates a strategic dilemma for senders we demonstrate that senders often have disincentives to enforce their sanctions policies given that the restriction on economic transactions with targeted states may undermine their firms competitiveness the model indicates that sanctions are more likely to succeed when the sender s firm retains a moderate share of the target s market relative to its foreign competitors however the model also demonstrates that sanctions are likely to be imposed only when the conditions do not favor their success the empirical implications of the model are tested using the threat and imposition of economic sanctions ties data set

the political effectiveness of terrorism revisited terrorists attack civilians to coerce their governments into making political concessions does this strategy work to empirically assess the effectiveness of terrorism the author exploits variation in the target selection of 125 violent substate campaigns the results show that terrorist campaigns against civilian targets are significantly less effective than guerrilla campaigns against military targets at inducing government concessions the negative political effect of terrorism is evident across logit model specifications after carefully controlling for tactical confounds drawing on political psychology the author concludes with a theory to account for why governments resist compliance when their civilians are targeted

social capital and social quilts network patterns of favor exchange we examine the informal exchange of favors in societies such that any two individuals interact too infrequently to sustain exchange but such that the social pressure of the possible loss of multiple relationships can sustain exchange patterns of exchange that are locally enforceable and renegotiation proof necessitate that all links are supported any two individuals exchanging favors have a common friend in symmetric settings such robust networks are social quilts tree like unions of completely connected subnetworks examining favor exchange networks in 75 villages in rural india we find high levels of support and identify characteristics that correlate with support

ethnic capital and intergenerational mobility this paper analyzes the extent to which ethnic skill differentials are transmitted across generations i assume that ethnicity acts as an externality in the human capital accumulation process the skills of the next generation depend on parental inputs and on the quality of the ethnic environment in which parents make their investments or ethnic capital the empirical evidence reveals that the skills of today s generation depend not only on the skills of their parents but also on the average skills of the ethnic group in the parent s generation

economic interdependence bargaining power and political influence bargaining theory is used to evaluate the proposition that asymmetrical economic interdependence among states is a source of political power it is shown that asymmetrical economic interdependence does not imply that less dependent actors will be able to exercise political influence over more dependent ones the use of economic interdependence for political influence requires instead that the exchange of economic resources for political concessions make both parties to a relationship better off than they would be if they bargained over the distribution of the gains from the economic relationship alone whether this is true is independent of the degree of asymmetry in the economic relationship or its direction an explanation is given for the fact that other scholars have reached different conclusions and the implications of these results for our understanding of a variety of types of relations among governments are derived

precision guided or blunt the effects of us economic sanctions on human rights this study analyzes the consequences of economic sanctions for the target country s human rights situation we offer a political economy explanation for different types of human rights infringements or improvements in reaction to economic shocks caused by sanctions based on that explanation we derive hypotheses linking sanctions to four types of human rights economic rights political and civil rights basic human rights and emancipatory rights we use endogenous treatment regression models to test those hypotheses by estimating the causal average treatment effect of us economic sanctions on each type of human rights within a uniform empirical framework unlike previous studies we find no support for adverse effects of sanctions on economic rights or basic human rights once the endogenous selection of sanctioned countries is modelled with respect to women s rights our findings even indicate a positive effect of sanctions that is associated with improvements in women s economic rights only our results for political rights and civil liberties suggest significant deterioration under economic sanctions we conclude that it is important to account for the potential endogeneity of economic sanctions and to distinguish different dimensions of human rights as the effects of economic sanctions along those dimensions may vary considerably

markets market failures and development a central question in development economics is how can we account for differences in the levels of income and the rates of growth between the developed and less developed economies in the 1950s and 1960s there was a standard answer to this question the poor are just like the rich except they are poorer they have less human and nonhuman capital there was an immediate prescription for this diagnosis increase the resources of ldcs either by transferring capital to them either direct aid or education or by encouraging them to save more today these answers seem less convincing that they did two decades ago if the problem were primarily a shortage of physical capital the return to capital should be much higher in ldcs than in developed countries and the natural avarice of capitalists would lead to a flow of capital from the more developed to the less developed economies see howard pack 1984 and my 1988 paper if the problem were primarily a shortage of human capital then the educated in ldcs should receive a higher absolute as well as relative income than the educated in more developed economies how then can we account for high levels of unemployment among the educated and the migration of the educated from ldcs to more developed economies moreover the predictions of the standard neoclassical growth model of a convergence of growth rates in per capita income with permanent differences in per capita consumption being explained by differences in savings rates and reproduction rates do not seem to have been borne out these observations suggest that the ldcs differ from the developed countries in at least some other important respects and this view is corroborated by those studies which have looked at the productivity of similar plants operating in developed and less developed economies see pack 1984 1987 the difference can be attributed perhaps tautologically to differences in economic organization to how individuals factors of production interact and to the institutions which mediate those interactions among the most important of these institutions are markets it is by now well recognized that there are many instances of market failures in more developed economies see bruce greenwald and myself 1986 in some cases market failures may be ameliorated by nonmarket institutions if for instance capital markets do not function well perfectly if only because of costly and imperfect information nonmarket institutions internal capital markets within large conglomerates may develop market failure is more prevalent in ldcs and the nonmarket institutions that ameliorate its consequences are at least in many instances less successful in doing so the objective of this paper is to explore the causes and consequences of these market failures and the failure of private nonmarket solutions and to suggest possible roles for government intervention tdiscussants anne 0 krueger duke university stanley fischer world bank

the hidden hand of economic coercion why do policymakers consistently employ economic sanctions even though scholars consider them an ineffective tool of statecraft game theoretic models of economic coercion suggest the success rate may be understated because of selection effects when the targeted country prefers conceding to incurring the cost of sanctions it has an incentive to acquiesce before the imposition of sanctions the bulk of successful coercion episodes should therefore end with sanctions threatened but not imposed this contradicts the recent literature on sanctions which assumes that sanctions rarely if ever work at generating significant concessions from the targeted country and are imposed for domestic or symbolic political reasons if the game theoretic argument is correct the crucial cases to study are those in which coercion is threatened but not implemented a statistical analysis of data on sanctions in pursuit of economic or regulatory goals strongly supports the gametheoretic argument these results suggest that the significance of economic coercion has been undervalued in the study of statecraft and international relations more generally

education borrowing constraints and growth abstract this paper studies the effects of educational borrowing constraints on economic growth and welfare we consider a three period lived overlapping generations model in which individuals finance their educational expenditures by borrowing we show that if the elasticity of human capital to educational expenditure is great enough the relationship between the tightness of the constraints and the growth rate is inverted u shaped when the constraints are binding moreover when the constraints cease to be binding the growth rate is constant we also show that a relaxation of the constraints cannot be pareto improving even if the growth rate rises

schooling and economic growth a king rebelo experiment with human capital abstract education is added to the standard neoclassical growth model by calibrating a human capital technology to the empirical evidence on schooling simulation experiments patterned after king and rebelo 1993 american economic review 83 908 931 are conducted when agents act as if they are infinitely lived interest rates are too high and the rise in school spending is too weak over the transitional growth path when schooling is inefficiently low due to binding intergenerational credit constraints interest rates deviate only moderately from the steady state level and the historical rise in school spending is fully explained

schools and housing values this study combines historical and quantitative methods to determine the market response to a major nineteenth century american urban architectural form the speculatively built row house the paper estimates a hedonic price index which decomposes the

a computable general equilibrium model of international sanctions in iran we detail recent international sanctions against the iranian economy and its government imposed by a subset of developed countries the effects of these sanctions on the iranian economy in general and upon upper and lower income rural and urban iranian households as well as the iranian government are modelled using a computable general equilibrium cge model we supplement the global trade analysis project 8 data set using income and expenditure shares from the urban and rural household income and expenditure survey from the statistical centre of iran sci the model is calibrated to simulate the effects of international sanctions as closely as possible we use endogenous trade taxes to simulate the effects of sanctions on iranian oil and petrochemical exports and iranian imports of petroleum products metal products and motor vehicles our study finds that international sanctions reduced aggregate iranian welfare by 14 15 rural households in iran suffered welfare losses which were almost double those experienced by urban households and the poorest urban and rural households experienced the largest welfare losses in the order of 5 10 but the government of iran sees a decrease in real revenue of 40 50 due to the large negative effect of sanctions on the iranian oil sector

state owned mncs and host country expropriation risk the role of home state soft power and economic gunboat diplomacy expropriation risk has a binding effect on foreign direct investment fdi however state owned multinational corporations may counter the monopoly power of the host state by leveraging the political influence of their home government the magnitude of this counter force we argue may vary depending on the strength of political relations between the home and host state and the level of economic dependence of the host country on the home market we find supporting evidence of our hypotheses using chinese firm level fdi information between 2003 and 2010

the kyoto protocol market power and enforcement the kyoto protocol aims to limit aggregate carbon emissions by participating countries to 1990 emissions levels in aggregate it also allows for the creation of a permit market in which countries will be able to buy and sell the right to emit carbon dioxide this paper investigates how market power held by the countries of the former soviet union and enforcement of the carbon emission limits might affect the abatement and the cost of compliance with the kyoto protocol to do so it uses a modified version of the van egteren weber 1996 model to investigate a permit market in the presence of both market power and enforcement difficulties it then simulates the model finding that if meeting abatement targets is the goal regulating the supply side of the market and convex fine schedules are the most effective tools

how international sanctions worked domestic and foreign political constraints on the brazilian informatics policy from 1985 to 1989 a trade conflict between the united states and brazil developed around brazil s protectionist information technology policy during that period and under the threat of trade sanctions some changes were made in the brazilian policy the effectiveness of sanctions in promoting policy changes in brazil resulted not only from economic losses but also from the shift provoked in the balance of political support for the policy within brazilian society moreover sanctions were effective not because they affected the interests of groups benefiting from the policy but because they pushed previously uncommitted groups to join the opposition to it

transitional dynamics and economic growth in the neoclassical model neoclassical transitional dynamics are a central element of standard macroeconomic theory quantitative experiments with the fixed savings rate models of the 1960s showed lengthy transitions thus potentially rationalizing sustained differences in growth rates across countries the authors investigate quantitative transitional dynamics in various neoclassical models with intertemporally optimizing households lengthy transitions occur only with very low intertemporal substitution generally when one tries to explain sustained economic growth with transitional dynamics there are extremely counterfactual implications these result from the fact that implied marginal products are extraordinarily high in the early stages of development copyright 1993 by american economic association

sanctions and civil conflict using a formal general equilibrium framework this paper analyses how sanctions imposed on the contestants in civil conflict affect the welfare of these contestants and the allocation of resources to conflict it is shown that weak sanctions can hurt the contestant they are supposed to help while strong sanctions augment the expected welfare of their intended beneficiaries moreover sanctions are more likely to be successful if the contestant who is subject to sanctions can expect to derive a positive income in case of compliance the likelihood of success rises as this income increases

do economic sanctions destabilize country leaders do economic sanctions destabilize the governments they target a form of foreign pressure sanctions are typically meant to alter the policies of other countries there is much pessimism on whether they ever work this article shows that economic pressure works in at least one respect it destabilizes the leaders it targets i present a theoretical argument that explains why destabilization is a necessary condition for successful coercion i find evidence that pressure destabilizes in a large panel of cross country time series data the destabilization finding indicates that sanctions may be more effective at altering policies than we think i conclude by noting that greater optimism regarding the effectiveness of sanctions should be balanced by a careful consideration of the policy s real and sizeable costs for those caught in the middle

on the contract curve a test of alternative models of collective bargaining the traditional model of collective bargaining confines unions to settlements constrained by the employer s labor demand curve but an alternative model places wage employment outcomes on a contract curve that extends beyond the labor demand curve this paper derives a multidimensional hedonic contract curve model in which employment security provisions are used to maintain efficient bargains outside the employer s demand curve and distinguishes empirically between the contract curve and demand constraint models using data for public school teachers in new york state estimates clearly support the contract curve model over the demand constraint model by linking the gap between compensation and the value of the marginal product to the strength of employment security provisions

when do imposed economic sanctions work previous research has documented only a modest success rate for imposed sanctions by contrast the success rate is higher in cases that are settled at the threat stage in this article the authors provide new insights about the circumstances under which sanctions cause behavioral change only after being imposed first the target must initially underestimate the impact of sanctions miscalculate the sender s determination to impose them or wrongly believe that sanctions will be imposed and maintained whether it yields or not second the target s misperceptions must be corrected after sanctions are imposed a game theoretical model with incomplete information is used to develop and clarify the argument

sanctions in networks abstract in this paper we contribute to the sender target models of sanctions by explicitly incorporating the linkages social political or economic that bind the sender and target to other agents given any network model and architecture we draw attention to two factors that play a key role in determining the efficacy of sanctions in reducing the frequency of violations these are respectively strategic complementaritiesbetween the sanctioning action deleting link with target and number of direct links of the sender and the externalities imposed on the sender by third parties we examine the role played by these factors both in the short run when links can only be deleted and the long run when links can also be added as well as when sanctions are unilateral the sender can only delete own links or multilateral the sender can impose on common allies to sever links to the target our analysis allows an active role to the target to build an opposing coalition to deflect sanctions and to third parties to engage in sanction busting it also extends to multiple senders and targets existence of interest groups within sender and target with dissimilar objectives and signed networks allowing both antagonistic and cordial bilateral relationships

inequality and growth why differential fertility matters we argue that inequality and growth are linked through differential fertility and the accumulation of human capital we build an overlapping generations model in which dynasties differ in their initial endowment with human capital growth the income distribution and fertility are endogenous due to a quantiy quality tradeoff families with less human capital decide to have more children and invest less in education when initial inequality is high large fertility differentials lower the growth rate of average human capital since poor families who invest little in education make up a large fraction of the population in the next generation a calibrated model shows that this fertility differential effect is quantitatively important we also provide empirical evidence to confirm the links between inequality differential fertility and growth suggested by the model

the effect of sanctions on u s foreign direct investment for years the united states has imposed economic sanctions to com pel countries to alter their behavior an important concern is whether government sanctions influence private foreign direct investment fdi decisions the largest source of foreign capital in the first study to assess empirically the relationship between economic sanctions and fdi we consider whether u s sanctions influence u s fdi inflows into targeted countries using panel data for 171 countries from 1965 to 2000 we find strong evidence that u s investors pull out of countries targeted for u s sanctions prior to their imposition this disinvestment is not permanent and invest ment tends to return after the sanctions are imposed the results provide support for fdi studies that show the effect of risk on investor decision making the use of economic sanctions by the united states to compel countries to alter their behavior has increased in recent years at the same time u s foreign direct investment fdi has expanded with u s multinational corporations mncs rep resenting the largest share of global fdi despite the growth of u s fdi and the u s government s imposition of sanctions no empirical work has considered the relationship between sanctions and u s investor decisions how do u s mncs react to the use of u s sanctions and does u s fdi make sanctions more or less effective in this article we analyze the impact of u s sanctions on investment decisions made by u s mncs building on investors risk calculations that are critical to the fdi literature 1 we propose several reasons why risk linked to economic sanctions influences fdi flows we hypothesize that u s firms significantly draw down their investment in tar geted countries prior to the imposition of sanctions as risk levels are most height ened however after sanctions have been in place long enough for investors to understand their specific restrictions uncertainty surrounding the amount of risk decreases and u s fdi is expected to return to levels near the pre sanction period

consumption risk sharing in social networks we develop a model of informal risk sharing in social networks where relationships between individuals can be used as social collateral to enforce insurance payments we characterize incentive compatible risk sharing arrangements and obtain two results 1 the degree of informal insurance is governed by the expansiveness of the network measured by the number of connections that groups of agents have with the rest of the community relative to group size twodimensional networks where people have connections in multiple directions are su ciently expansive to allow very good risk sharing we show that social networks in peruvian villages satisfy this dimensionality property thus our model can explain townsend s 1994 puzzling observation that village communities often exhibit close to full insurance 2 in second best arrangements agents organize in endogenous risk sharing islands in the network where shocks are shared fully within but imperfectly across islands as a result network based risk sharing is local socially closer agents insure each other more

school quality and black white relative earnings a direct assessment the wage differential between black and white men fell from 40 percent in 1960 to 25 percent in 1980 it has been argued that this convergence reflects improvements in the relative quality of black schools to test this hypothesis we assembled data on pupil teacher ratios annual teacher pay and term length for black and white schools in the eighteen segregated states from 1915 to 1966 these data are linked to estimated returns to education for southern born men from different cohorts and states in 1960 1970 and 1980 improvements in the relative quality of black schools explain 20 percent of the narrowing of the black white earnings gap between 1960 and 1980

the termination of international sanctions explaining target compliance and sender capitulation abstract with the proliferation of sanctions after the end of the cold war the termination of these punitive measures has become a ubiquitous phenomenon in international politics yet research has hitherto almost exclusively focused on sanctions implementation and effectiveness whereas their termination has received little attention in this paper we draw on studies analyzing the varying duration of sanctions to examine under which conditions they end in contrast to prior research that has mostly treated the end of sanctions as a single category our analysis disaggregates sanctions termination by target compliance and sender capitulation we run a competing risks model using novel dyadic sanctions data and show that the determinants of both outcomes significantly diverge while poor economic health and high political volatility in the target country make it significantly more likely to comply political alignment between the sender and target and leadership changes in the sender country lead to a higher probability of sender capitulation

economic structure and international security the limits of the liberal case the theory that a liberal international economic structure is associated positively and a mercantilist structure negatively with international security is widespread but the case in favor of liberalism and the case against mercantilism are both one sided and the whole attempt to link economic structure to international security anyway overestimates the influence that economic structure has on the use of force political and military factors provide explanations more convincing than economic ones for the propensity of states to resort to or refrain from the use of force liberal and mercantilist structures each have both positive and negative impacts on the use of force but these impacts become important only when they are complemented by noneconomic factors governing the use of force hence security grounds cannot be used convincingly either as a reason for maintaining the current liberal system or as a reason for opposing a shift toward a more mercantilist structure of international economic relations

intergenerational transfers and the accumulation of wealth h t ouseholds acquire wealth from two sources they save out of income they have earned and they receive transfers from other people the first method of wealth accumulation goes under the name of life cycle saving in which people save during their working lives and dissave after retirement the second involves either an inter vivos transfer that is a transfer between living people or a bequest a transfer that occurs at the death of the donor while inter vivos transfers and bequests will arise in dynastic models where preferences include a taste for the well being of one s descendents few empirical life cycle models reflect these concerns indeed a sharp debate has arisen over the ability of the simple life cycle model to explain observed wealth accumulation understanding the relative sizes of these sources of wealth accumulation affects a variety of issues for example the effects of government debt social insurance public transfer programs estate taxes and incentives for charitable giving depend to some extent on the magnitude and nature of private saving and transfers of wealth analyses of the inequality of wealth may depend on whether most of wealth is earned or received as transfers appropriate policies for encouraging private saving may look rather different depending on whether most saving is to be consumed later in life or passed along to the next generation finally evidence on transfer patterns relates to more fundamental

the quality of schooling quantity alone is misleading although much research discusses the quantity of schooling as an effective impact on productivity and earnings most such research leaves out the idea of the quality of schooling which may cause biases in the estimated returns to schooling this paper consequently attempts to extend the standard mincerian approach to incorporate school quality as well as quantity it demonstrates how exclusion of quality in the standard procedure may cause biases in the estimated returns to years of schooling probably in the upward direction the paper explores the implications of this extension of the standard model for the case of young brazilian males it shows that the estimate of the private return to years of schooling using the preferred quality inclusive specification is only one half the estimate using the standard procedure indicating substantial upward bias in the standard estimates it further outlines a method for estimating a social return to quality and finds that it exceeds substantially the social return to quantity the paper then shows why this in turn suggests there may be an equity productivity trade off in schooling investments

public education expenditures taxation and growth linking data to theory governments around the world have taken a prominent role in financing education while justifications for this involvement are varied a common motivation is that education expenditures are a key to sustained economic growth economic theory provides a foundation for this belief many papers in the endogenous growth literature have formalized a link between public education expenditures human capital accumulation and long term growth while theory assigns public education expenditures a key role in growth empirical support for the link is mixed as highlighted by blankenau and simpson 004 the disconnect between theory and data can be reconciled by taking a closer look at the theory in nearly every model where growth is fueled by public education expenditures a nonmonotonic relationship between expenditures and growth can arise public education spending increases growth while taxes may decrease growth leaving the net effect ambiguous thus economic theory shows that to identify the growth effects of expenditures one must account for any offsetting effects of the requisite taxation most empirical investigations of these effects do not explicitly control for the method of finance however in contrast we make the relationship between expenditures taxation and growth central to our analysis we estimate a

the theory of international economic sanctions a public choice approach comment william kaempfer and anton lowenberg in this review september 1988 have developed an engaging model of the sanctions process grounded in public choice they identify potentially influential private forces that might affect the nature of a sanctions package while the spirit of their effort is laudable the model fails to incorporate some absolutely essential information about the legal institutional and strategic framework in which sanctions decisions are made as a consequence they reach a conclusion that flies in the face of existing facts contrary to what is suggested by kaempfer and lowenberg kl and contrary to the implications of their model the evidence clearly indicates there is an unequivocal bias against the use of import restrictions in favor of export controls the recent history of economic sanctions shows that only somewhat more than one third of sanction episodes involved both export and import controls further gary hufbauer and jeffrey schott 1985 observe that in instances where only one or the other is invoked export controls are almost always preferred to restrictions on imports 2 an almost exclusive reliance on export controls in economic foreign policy measures is particularly evident in the actions of the united states in the 1970s 3 the purpose of this comment is to explore the causes of this asymmetry there are at least three reasons why export controls have been favored over import controls reasons that play no part in the kl model first the general agreement on tariffs and trade gatt has institutionalized a bias against import barriers in favor of export controls second in the united states domestic legal constraints favor export controls and discourage import controls third as will be argued export controls are more easily reversed than import controls and reversibility is a desirable component in any foreign policy based trade intervention consider these points in turn in the 1946 1948 period during which time the gatt was first negotiated trade barriers were identified most often with those artificial impediments to trade that restrict foreign access to domestic markets especially tariffs for this reason gatt rules and actions have sought primarily to dismantle import barriers john jackson 1969 p 502 notes that despite the fact that extensive export controls do exist there has been only one complaint with respect to such controls reflected in gatt documents this is the czechoslovakian complaint against the united states in 1949 for the imposition of discriminatory export controls 4 jackson p 502 observes that there is very little if any effective gatt policing of export control policy and he comments later p 539 that insofar as any gatt obligations can be avoided without consequences this avoidance operates in effect as an exception this suggests that those foreign policy export controls that are pro department of economics university of arizona tucson az 85721 i thank alan deardorff bernard hoekman and robert stem for helpful discussions on work related to this note my thanks also to two anonymous referees for their constructive comments see p 28 and tables 4 1 4 5 pp 70 77 hufbauer and schott 1985 2ibid p 28 3see for example richard cooper 1987 pp 301 302 and p 305 and kenneth abbott 1981 p 741 4this is confirmed more recently by barry carter 1988 p 97 the only other event involving export restrictions challenged before the gatt was the u s embargo against nicaragua in 1985 which involved both import and export restrictions