Investigating the Impact of Economic Sanctions Shock on the Construction Sector in Iran (SVAR Approach)

Abstract

Basically, quantitative specification of sanction effects on economic sectors has undeniable importance to increase the buffering of nations’ economy against their negative effectsThis study examines the impacts of economic sanctions shocks through four indicators: (a) crude oil export revenue shock, (b) non-oil export shock, (c) raw material import shock, capital and intermediate goods, and exchange rate shocks on the construction sector in Iran. For this purpose, the research data were collected from the Central Bank of the Islamic Republic of Iran during the period 1996-1996. Also, structural vector autoregressive model (SVAR) and impulse resonse function (IRF) were used to analyze the data. Results showed that economic sanctions diminished the value added of the construction sector. However, the impact of the economic sanctions indicators examined on this section varies. Among the four indicators of economic sanctions under consideration, respectively: (a) exchange rate shocks; (b) raw material import shocks; intermediate goods and capital; (c) non-oil export shocks; and (d) oil export earnings shocks have the greatest negative impact on the value added of the construction sector.

Keywords

• economic sanctions
• construction sector
• structural vector auto regression model
• impulse resonse function
• analysis table of variance