CHAO JING’s research while affiliated with University of Colorado Boulder and other places

The literature on economic sanctions suggests that the choice of policy instrument, for example trade sanctions, financial sanctions, or military intervention, is endogenous to the political process and, in particular, to the policy outcome sought by the sanctioner. But the choice of instrument also affects the outcome of the sanctions. Therefore, the sanctions policy outcome and the probabilities of the sanctioner's adoption of different sanctions instruments are jointly determined. To capture this endogeneity, multivariate probit and logit models are estimated using data from Hufbauer, Schott & Elliott, with the random utilities to the sanctioner of choosing military action, trade sanctions, and financial sanctions as dependent variables. The expected probabilities of choosing these alternatives are then incorporated as explanatory variables in predicting the success of the sanctions in attaining their political objectives. This procedure generates simultaneous estimates of the determinants of both instrument choice and sanctions success. The empirical results indicate that military force is less likely to be used against an economically healthy and politically stable target than against a more vulnerable target. However, military action is encouraged by third-country assistance to the sanctioned country and by a high cost of sanctions to the sanctioner. Financial sanctions are more likely to be used against a target that receives third-country support but are less likely against an economically healthy country. Sanctions success is positively correlated with the degree of warmth in relations between sanctioner and target prior to the sanctions; negatively correlated with the size of the sanctioner relative to the target; and negatively correlated with the economic health and political stability of the target. There is no evidence that third-country assistance to the target diminishes the effectiveness of sanctions or that the cost of sanctions to either the target or the sanctioner has a strong effect on the sanctions outcome.

Multinational firms play a crucial role in the transmission of international policies across sovereign states. The present paper models the international policy equilibrium when conflict arises between two states, in which one state wishes to modify the policy choices of another state, and both the governments and their policy choices are subject to a self-interest maximization process on the part of voters, firms and government agents. Multinational firms are able to engage in lobbying activity in both their home countries and host countries in order to maximize firm-level profits. The analysis examines cases of both democratic and autocratic host countries.