Oil sanctions and their transmission channels in the Iranian economy: A DSGE model

Autor: Rasul Bakhshi Dastjerdi, Meysam Rafei, Monireh Rafat, Seyyed Reza Nakhli
Rok vydání: 2021
Předmět:
Zdroj: Resources Policy. 70:101963
ISSN: 0301-4207
DOI: 10.1016/j.resourpol.2020.101963
Popis: The political history of Iran in the last 67 years shows that Iran has always been the target of sanctions especially oil-related sanctions imposed by other countries and international organizations. Oil sanctions in the form of export, extraction technology, and foreign financing are the most important sanctions that have had significant effects on Iran's macroeconomic variables. Therefore, in this paper an attempt has been made to analyze the impacts of the abovementioned sanctions on the Iranian economy in the form of a Dynamic Stochastic General Equilibrium Model with the New Keynesian approach. The simulation of amplifying the intensity of the shock of oil sanctions demonstrates that the oil sanctions in the oil industry, reduce the amount of foreign and government investment, extraction technology level and oil export which causes a reduction in oil production. In the monetary and exchange sector, the sanctions reduce the central bank's foreign reserves ratio to the money base which increases the nominal exchange rate and in turn, raises the non-oil exports and causes a drop in imports. Regarding the government sector, government oil revenues decrease and this calls for the creation of money and seigniorage by the central bank for financing budget deficits such that the government pushes the budget towards maintaining the current expenditure and falling capital expenditure. In the household sector, there are increases in consumption expenditure and decreases in investment expenditure due to the expected inflation and ultimately, there is an increase in domestic products due to an increase in non-oil exports and decreased import and this subsequently raises the inflation.
Databáze: OpenAIRE
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