Experience Open to Interpretation: US Presidents and Economic Coercion

Research offers a conflicting account of the effect of economic sanctions on the popularity of political leaders. Yet, literature on beliefs formation signals that leaders may be susceptible to confirmation bias in respect to audience effects of sanctions. In this article, I develop a formal model of behaviour of political leaders in respect to sanctions in an environment where signals are open to interpretation. I test the theory using an event study design and data on approval ratings of US presidents. I observe an anticipation effect for US presidents, with lower approval ratings prior to imposition of economic sanctions.