The Impact of Economic Sanctions on Iran's Economic Growth Rate (Fuzzy Approach)

Abstract

Economic growth rate is one of the most important economic variables that are affected by various factors. According to empirical studies, many visible and invisible political, social, and economic factors have been effective on the growth rate in Iran; Factors that cannot all be included in an economic model. The conventional methods preclude us from commenting with certainty about the effectiveness of some of these factors on the growth rate. Based on this argument, in this research, the fuzzy approach has been used to investigate the effect of the economic sanctions imposed against Iran along with other variables affecting the economic growth rate in the period after the Islamic Revolution (1357-1400). The results show that severe economic sanctions with a high and strong fuzzy coefficient have had a significant negative effect on the growth rate in Iran. After severe sanctions, budget deficit, liquidity, exchange rate, and moderate sanctions have had the most negative effects on the economic growth rate in this period. The fuzzy coefficients obtained for the variables of oil revenues, labor force growth, physical capital, human capital, degree of openness of the economy, economic growth rate of the previous year, and net foreign direct investment in Iran, respectively, indicate the positive effect of these variables on the growth rate in this period of time. Also, the result of the re-estimation of the model, taking into account the first breaks of the variables of oil revenues and budget deficit in the economic growth rate, confirms the output of the first model. In this case, severe economic sanctions have had the most negative effect on Iran's economic growth rate.

Keywords

• economic sanctions
• economic growth rate
• iran
• fuzzy regression