Suggestion An Index for Economic Sanctions and its Impact on Inflation

Document Type : Original Article

Authors

1 PhD Candidate in Economics, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

2 Associate Professor of Economics, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

10.48308/jem.2025.237359.1949

Abstract

One of the main challenges 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 price index (inflation) 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 using the Structural Vector Autoregression model and Vector Error Correction model, the effects of sanctions on inflation in the Iranian economy and its amount were separated from other effective factors is measured. The main goal of this article is to answer the question “Do sanctions have an effect on inflation in the Iranian economy?” The results indicate that sanctions have contributed to an increase in the general consumer price index (inflation) of 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.

Keywords

Main Subjects

References

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Journal of Economics and Modelling
Volume 15, Issue 2 - Serial Number 58
September 2024
Pages 67-94

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