Financial Sanctions and the Imports of Intermediate and Capital Goods in Iran: DID Method

Document Type : Research Paper

Authors

1 PhD student in Economics and Finance, University of Sistan and Baluchestan. Iran,. Email: Samira.heidarian31@gmail.com.

2 Associate Professor of Economics, Department of Economics, University of Sistan and Baluchestan, Iran. (Corresponding Author) Email: pahlavani@eco.usb.ac.ir

3 Professor of Economics, Institute for Humanities and Cultural Studies, Iran, Email: h.jalili@yahoo.com

Abstract

During the last three decades, financial sanctions have been imposed on Iran by the United States, the European Union, and the United Nations Security Council. This paper aims at estimating the effect of financial sanctions on the import of capital and intermediate goods in Iran, which was carried out for two independent time periods. The first period (2010-2013) includes multilateral financial sanctions, and the second period (2016-2019) includes multilateral sanctions and the withdrawal of the United States from the JCPOA. We examined the impact using the difference-in-difference (DID) method.

The results of the first period indicate that the decrease in the imports of capital and intermediate goods in Iran depends more on the countries that "provided the sanctions plan" than the countries that did not provide the sanctions plan, because the coefficient of dummy variable for implementation in the random effects model is statistically significant. The negative effect of 0.007 on imports shows that the effect is weak, because this group of countries behaved differently. In the second period, the random effects model is statistically significant. In this model, the negetive effect of 0.22 on imports indicates a significant effect. Therefore, the reduction of Iran's imports in this period depends more on the countries that provided the sanctions plan than the countries that did not provide the plan.

Keywords

References

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International Journal of Business and Development Studies
Volume 15, Issue 2 - Serial Number 2
December 2023
Pages 101-134

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