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Economic sanctions usually fail, sometimes even provoking the opposite of the intended outcome. Why are sanctions so often ineffective? One prominent view is that sanctions generate popular support for the targeted government and its policies; an outcome referred to as the rally-around-the-flag effect. We quantify this effect in the context of a major trade dispute between Ukraine and the Russian Federation, which led to a cut in gas exports to Ukraine and a sharp increase of gas prices. Using individual data on political and economic preferences before and after the trade dispute and exploiting the cross section heterogeneity in the individual exposure to the price shock—measured by the connection to a centralized gas/heating system—we find that people more directly affected by the increase of gas prices were significantly more likely to change their opinions in support of Western-style political and economic systems preferred by the incumbent government, consistent with a rally-around-the-flag effect.

This paper explores the causes and the consequences of the evolution of family firms in the growth process. The theory suggests that in early stages of development, valuable family specific human capital stimulated the productivity of family firms and the development process. However, in light of the rise in the importance of managerial talents for firms’ productivity in later stages, family firms generated a misallocation of managerial talents, curbing productivity and economic growth. Evidence supports the dual impact of family firms in the development process and the role of socio-cultural characteristics in observed variations in the productivity of family firms.

In this paper, we introduce two new definitions of pair-wise and multi-wise similarity between short-run dynamics of inflation rates in terms of equality of forecast functions and show that in the context of invertible ARIMA processes the autoregressive metric introduced by Piccolo (1990) is a useful measure to evaluate such similarity. Then, we study the similarity of short-run inflation dynamics across European Union (EU)-25 Member States during the Euro period. Consistent with studies on inflation differentials and inflation persistence, our findings suggest that after seven years from the launch of the Euro the degree of similarity of short-run inflation dynamics across Euro area countries is still weak. By contrast, we find that EU countries not adopting the common currency, whether old EU or new accession Members, display a higher degree of inflation dynamics similarity both among each other and with Euro area countries.