Welfare Consequences of Imposing Oil Sanctions in Iran:
        Applying Dynamic Computable General Equilibrium Model

Sadeghvand, Behzad; Heidari, Hassan; Nejati, Mehdi

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Volume 33, Issue 113 (quarterly journal of economic research and policies 2025)

qjerp 2025, 33(113): 6-50

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Welfare Consequences of Imposing Oil Sanctions in Iran: Applying Dynamic Computable General Equilibrium Model

Behzad Sadeghvand ^*

, Hassan Heidari

, Mehdi Nejati

& Department of Economic Sciences, Faculty of Economics and Management, Urmia University , b.sadeghvand@urmia.ac.ir

Abstract: (435 Views)

Iran has been facing various sanctions for many years. A study of macroeconomic indicators shows that these sanctions have had negative effects on various economic and social areas of Iran. In this study, we have examined the impact of sanctions on household welfare. For this purpose, in the framework of three scenarios of a 60, 65, and 70 percent reduction in oil exports, the effects of sanctions on Iran's welfare have been examined based on the equivalent change index and its components using a dynamic computable general equilibrium model. The results obtained show that the imposition of sanctions has caused a decrease in welfare based on the EV index in Iran, and the continuation and intensification of sanctions has increased the rate of decline in welfare in Iran. Also, the welfare components of "allocation efficiency", "capital ownership benefits", "savings-investment relationship", "demographic changes" and "exchange relations" have been the components that have had the greatest effect on reducing the welfare of EV equivalent changes in Iran due to sanctions, and the components of "technological changes" and "non-accumulating endowments" under the influence of the imposed sanctions have not only not reduced welfare but have improved it. According to the results obtained, policy recommendations such as; "efforts to reduce the severity of sanctions and completely remove them", "reducing production costs", "adopting non-inflationary methods to compensate for the welfare shortcomings of households", etc. have been proposed to increase welfare in Iran.

Keywords: Economic sanctions, Welfare consequences, Computable general equilibrium model, Iran

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Type of Study: Research | Subject: Special

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Sadeghvand B, Heidari H, Nejati M. Welfare Consequences of Imposing Oil Sanctions in Iran: Applying Dynamic Computable General Equilibrium Model. qjerp 2025; 33 (113) :6-50
URL: http://qjerp.ir/article-1-3684-en.html

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