Investigating the Effects of Financial Sanctions on the Composition of Production Inputs in Iran: A Computable General Equilibrium Approach

Document Type : Research Paper

Authors

1 Department of Economics, Payam Noor University, Tehran

2 Associate Professor, Department of Economics, Payame Noor University

3 Economics, Payam e Noor University, Tehran Gharb

Abstract

The main objective of this study is to assess the impacts of financial sanction on combination of the factors of production in Iran. This analysis was performed using the computable general equilibrium (CGE) model and it focused on investment, employment, production, and price levels. After calibrating the CGE model and measuring the values of exogenous parameters and variables, the study assessed the economic impacts of sanctions on Iran’s economy using the 2016 input-output table (IO) and other statistical information based on scenario building. The results obtained using GAMS 34 revealed that Financial sanctions change the composition of production inputs in Iran and lead to an increase in the share of labor, compared to the capital factor in the economy. These changes lead to a decrease in production and an increase in the general level of prices, so that in the first and second scenarios, 4.42 and 11.11 percent, respectively, reduce economic growth and 1.84 and 4.72 percent, increase the general level of production prices

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References

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