Dr Alireza Garshasbi, Mr Mojtaba Yusefi,
Volume 7, Issue 25 (10-2016)
Abstract
Legal and economic dimensions of sanctions, and also its diversity make it difficult to evaluate the contribution of the sanctions on macroeconomic variables; besides quantification of sanction by itself is a major problem. As the first step in this study, we try to offer a new index for representing the sanction in economic modeling. For this purpose by applying the exploratory factor analysis approach, we try to measure the mentioned index and produce the time series for the period of 1978-2010; here twelve variables which are mainly affected by the sanctions included in related process. Then, applying three-stage least squares (3SLS) method for a small macroeconomic model, the contribution of the sanctions on major economic variables such as economic growth, trade, investment and employment are evaluated. According to the findings of this study, the direct effects of sanctions are only significant in growth and term of trade equations. It seems also that there is a direct relationship between severity of the sanctions and its impact on major economic variables.
