Examining the Impact of Economic Sanctions and Exchange Rate Fluctuations on Iran’s Imports

Document Type : Research Paper

Authors

1 Assistant Professor, Department of Economics, Faculty of Management and Economics, Lorestan University, Khorramabad, Iran

2 PhD student in Monetary Economics, Alzahra University, Tehran, Iran.

Abstract

Economic sanctions against Iran have inevitably affected the national currency value and the flow of international trade. At the same time, sanctions have influenced public expectations, contributing to increased exchange rate volatility. Recognizing the significance of these factors, the present study aims to examine the impact of economic sanctions and exchange rate fluctuations on Iran’s imports over the period 1991–2023. This study contains two key innovations. First, it categorizes the sanctions imposed on Iran’s economy into three levels of intensity: mild, moderate, and strong. Second, because multiple visible and invisible factors can affect a country’s imports, a fuzzy regression model is employed to fit the data and capture these complexities. The findings indicate that increasing exchange rate volatility raises transaction risks for importers, which in turn reduces the volume of imported goods. Additionally, the fuzzy coefficients of the dummy variables for sanctions show that the imposition of sanctions, besides limiting the inflow of goods and services, increases the total cost of imported goods. As a result, the ratio of imports to Iran’s GDP has experienced a significant decline. Furthermore, a comparison of the symmetric triangular fuzzy coefficients in the model suggests that the primary barrier to imports in Iran is high-intensity sanctions. These strong sanctions act as a substantial obstacle, overshadowing other factors and sharply reducing the inflow of goods and services.

Keywords

Main Subjects

References

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