Simulation of economic sanctions and its Imapct on inflation

Document Type : Original Article

Authors

1 Economics/Isfahan

2 Associate Professor, Isfahan University, Department of Economics

3 Department of economics

4 University of Isfahan

10.48308/jem.2025.237359.1949

Abstract

One of the main challenges that economists face when studying economic sanctions is the indexation of sanctions. Without a specific index that clearly shows the effects of sanctions, economic modeling does not provide reliable results. This article quantifies the effects of sanctions against the Iranian economy on the consumer inflation index over the period 1979-2022. For this purpose, a quantitative index was used to measure the strength of sanctions and compare their severity with each other using mathematical calculations. Then, by applying the structural vector autoregression (SVAR) model, the effects of sanctions on inflation in the Iranian economy and its amount were separated from other effective factors. The main effort of this article is to answer the question "Do sanctions have an effect on inflation in the Iranian economy or not. "The results indicate that sanctions have contributed to an increase in the general consumer price index (inflation) by 7.9 percent. This shows that in inflation targeting, in addition to variables such as liquidity volume, interest rate, etc., the policymaker should pay special attention to the quantification of the severity of sanctions.

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Journal of Economics and Modelling
Volume 15, Issue 2 - Serial Number 58
September 2024
Pages 71-101

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