International Economics
Saeed Iranmanesh; Reza Etesami; reza Ashraf gangoei
Abstract
Since the revolution, Western countries such as the United States of America, the European Union, and the United Nations Security Council have consistently implemented a variety of extensive sanctions on the Islamic Republic of Iran. These sanctions have had a significant impact on Iran's foreign balance ...
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Since the revolution, Western countries such as the United States of America, the European Union, and the United Nations Security Council have consistently implemented a variety of extensive sanctions on the Islamic Republic of Iran. These sanctions have had a significant impact on Iran's foreign balance of payments, particularly in the area of foreign trade. To analyses the effects of these sanctions, a dynamic systems approach was used to simulate Iran's foreign trade pattern. Additionally, the opinions of 15 economics experts were collected through fuzzy questionnaires and analyses using the fuzzy logic method to determine the variable index of sanctions. The research period covered 1979-2021, and four scenarios were examined to assess the economic effects of sanctions on Iran's foreign trade model. The results revealed that sanctions on Iran's exports pose the greatest risk to the country's foreign balance, highlighting the importance of focusing on export development to mitigate the impact of economic sanctions. Furthermore, the study suggests that leveraging trade agreements and strategic partnerships with regional countries can help mitigate the economic consequences of sanctions.
International Economics
Faranak Miraali; Saied Isazadeh; Seyed Ehsan Hosseinidoust
Abstract
Foreign direct investment (FDI) is considered as an inseparable features of an open and influential global economic system and a key factor for growth and development between countries. Due to having huge amount of oil and gas resources as well as relatively large markets, Iran has a great potential ...
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Foreign direct investment (FDI) is considered as an inseparable features of an open and influential global economic system and a key factor for growth and development between countries. Due to having huge amount of oil and gas resources as well as relatively large markets, Iran has a great potential for attracting FDI far more than its performance. However, various sanctions imposed on the country in recent years has led to a decrease in FDI by creating a hostile psychological environment and high risk for economic activities. In this paper, we are going to examine the widespread impacts of economic sanctions imposed by the US on the FDI of Iran between 1980 and 2020 through a model called the synthetic control (SCM). Through SCM we estimate the difference in FDI between the treated country (Iran) and the counterfactual (Synthetic Iran). The results show that the sanctions leads to almost 12 billion $ reduction in the FDI compared to the no-sanctions situation. Following the escalation of sanctions under the Trump administration and the withdrawal of the US from the JCPOA, the adverse effects of declining FDI peaked at 20 billion $ in 2020.The placebo tests also show that the there are statistical significance in findings (at the 10%
International Economics
Mahdi Hemmati; Ebrahim Hadian; Ali Hussein Samadi; Ahmad Sadraei Javaheri
Abstract
Exchange rate misalignment has involved many world countries. It has profoundly affected the internal and external sectors of the economy. Hence, disclosing the emergence and formation causes of the misalignments is a requisite. Studies on the Iranian economy have mostly evaluated the sanctions’ ...
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Exchange rate misalignment has involved many world countries. It has profoundly affected the internal and external sectors of the economy. Hence, disclosing the emergence and formation causes of the misalignments is a requisite. Studies on the Iranian economy have mostly evaluated the sanctions’ efficacy on macroeconomic variables, involving the economic growth, domestic production, liquidity, exports, imports, oil price, oil revenues, etc. Few studies have evaluated the sanctions’ impact on the foreign exchange market. There is no research work assessing the sanctions’ impact on exchange rate misalignment in Iran. The main purpose of this paper is to estimate the impact of economic sanctions on real effective exchange rate (REER) misalignment in the context of the Iranian economy during the period 1996:1 - 2019:4. In doing so, at first we apply the model designed by Edwards (1989) and Cottani et al. (1990) and using smooth transition regression (STR) to estimate the REER equilibrium and its misalignment. Moreover, factor analysis is used to estimate the sanction indices. Then to analyze the impact of economic sanctions on the REER misalignment a nonlinear autoregressive distributed lag (NARDL) model is employed.The time path of estimated REER misalignment indicates a lot of volatilities during the period of study. The estimated results also show that sanctions significantly affect these volatilities in the short run and long run and thereby increase REER disequilibrium in the Iranian economy.
Seyed Reza Nakhli; Monireh Rafat; Rasul Bakhshi Dastjerdi; Meysam Rafei
Abstract
Since the nationalization of the oil industry, especially after the 1979 revolution, Iran has always encountered economic sanctions. The oil embargo and international financial sanctions are the most severe sanctions imposed on Iran and have had significant effects on Iran’s macroeconomic variables. ...
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Since the nationalization of the oil industry, especially after the 1979 revolution, Iran has always encountered economic sanctions. The oil embargo and international financial sanctions are the most severe sanctions imposed on Iran and have had significant effects on Iran’s macroeconomic variables. The current study aimed to analyze the effects of economic sanctions on Iran’s macroeconomic variables using a dynamic stochastic general equilibrium (DSGE) model based on the new Keynesianapproach. The simulation results showed that the intensification of the oil and international financial sanctions would 1) reduce foreign and government investment, technology innovation,export in the oil sector, and consequently oil production, 2) lead to a higher exchange rate and a decrease in the ratio of the central bank foreign exchange reserves to the monetary base, 3)reduce the GDP and non-oil exports and increase the inflation, which may cause stagflation, 4) increase household consumption and decrease household investment, 5) increase budget deficit, forcing the government to adopt policies to raise current expenditures and maintain housing and urban developmentbudget, which, in turn, will lead to a budget deficit and bond sales. The analysis of various optimal monetary policies in the context of economic sanctions and considering the contingent business interruption (CBI) loss function showed that the optimal simple rule, in the form of the producer price index, targeting monetary policy, could reduce the loss function and increase the importance value of output coefficient in themonetary policy.
