Economic sanctions are a frequently used tool of foreign policy. Constraining trade flows towards or from the target country is supposed to coerce its government into changing certain policies. However, sanctions constitute an obstacle to trade, thereby affecting flows of all countries,...

The extensive margin of bilateral trade exhibits a high level of persistence that cannot be explained by geography or trade policy. We combine a heterogeneous firms model of international trade with bounded productivity with features from the firm dynamics literature to derive expressions for an...

There is strong empirical evidence showing that political relations have an impact on aggregate bilateral trade flows. In this paper, we show that the impact is heterogeneous across products, depending on product characteristics. Specifically, imported products used as intermediate inputs...