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Nexus between economic sanctions and inflation: a case study in Iran

Conventional studies have applied dummy variables to analyse the relationship between economic sanctions and inflation while we construct an index which is called Trade-Financial Sanctions (TF index). TF Index is a liner combination of indices which includes trade openness and foreign investment by...

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Main Authors: Ghorbani Dastgerdi, Hamidreza, Yusof, Zarinah, Shahbaz, Muhammad
Format: Article
Published: Taylor & Francis 2018
Subjects:
HC Economic History and Conditions
Online Access:http://eprints.um.edu.my/22030/
https://doi.org/10.1080/00036846.2018.1486988
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spelling my.um.eprints.220302019-08-23T01:42:41Z http://eprints.um.edu.my/22030/ Nexus between economic sanctions and inflation: a case study in Iran Ghorbani Dastgerdi, Hamidreza Yusof, Zarinah Shahbaz, Muhammad HC Economic History and Conditions Conventional studies have applied dummy variables to analyse the relationship between economic sanctions and inflation while we construct an index which is called Trade-Financial Sanctions (TF index). TF Index is a liner combination of indices which includes trade openness and foreign investment by applying the principal component model. Through the TF index and market exchange rate the impact of economic sanctions on inflation is analysed in the three phases of sanctions; free sanctions, heavy sanctions, and light sanctions. The results illustrate that the TF index decreases inflation when the Iran’s economy experiences free sanctions or light sanctions relative to when the economy is in heavy sanctions. Heavy sanctions create instability in the market exchange rates and widening the gap between the market and the official exchange rates. Furthermore, economic sanctions increase expected inflation among the people and drive higher inflation. Therefore, these results suggest that the government should work more seriously to solve the main obstacles of trade and investment inflows imposed by the economic sanctions. Taylor & Francis 2018 Article PeerReviewed Ghorbani Dastgerdi, Hamidreza and Yusof, Zarinah and Shahbaz, Muhammad (2018) Nexus between economic sanctions and inflation: a case study in Iran. Applied Economics, 50 (49). pp. 5316-5334. ISSN 0003-6846 https://doi.org/10.1080/00036846.2018.1486988 doi:10.1080/00036846.2018.1486988
institution Universiti Malaya
building UM Library
collection Institutional Repository
continent Asia
country Malaysia
content_provider Universiti Malaya
content_source UM Research Repository
url_provider http://eprints.um.edu.my/
topic HC Economic History and Conditions
spellingShingle HC Economic History and Conditions
Ghorbani Dastgerdi, Hamidreza
Yusof, Zarinah
Shahbaz, Muhammad
Nexus between economic sanctions and inflation: a case study in Iran
description Conventional studies have applied dummy variables to analyse the relationship between economic sanctions and inflation while we construct an index which is called Trade-Financial Sanctions (TF index). TF Index is a liner combination of indices which includes trade openness and foreign investment by applying the principal component model. Through the TF index and market exchange rate the impact of economic sanctions on inflation is analysed in the three phases of sanctions; free sanctions, heavy sanctions, and light sanctions. The results illustrate that the TF index decreases inflation when the Iran’s economy experiences free sanctions or light sanctions relative to when the economy is in heavy sanctions. Heavy sanctions create instability in the market exchange rates and widening the gap between the market and the official exchange rates. Furthermore, economic sanctions increase expected inflation among the people and drive higher inflation. Therefore, these results suggest that the government should work more seriously to solve the main obstacles of trade and investment inflows imposed by the economic sanctions.
format Article
author Ghorbani Dastgerdi, Hamidreza
Yusof, Zarinah
Shahbaz, Muhammad
author_facet Ghorbani Dastgerdi, Hamidreza
Yusof, Zarinah
Shahbaz, Muhammad
author_sort Ghorbani Dastgerdi, Hamidreza
title Nexus between economic sanctions and inflation: a case study in Iran
title_short Nexus between economic sanctions and inflation: a case study in Iran
title_full Nexus between economic sanctions and inflation: a case study in Iran
title_fullStr Nexus between economic sanctions and inflation: a case study in Iran
title_full_unstemmed Nexus between economic sanctions and inflation: a case study in Iran
title_sort nexus between economic sanctions and inflation: a case study in iran
publisher Taylor & Francis
publishDate 2018
url http://eprints.um.edu.my/22030/
https://doi.org/10.1080/00036846.2018.1486988
_version_ 1643691732170178560
score 13.211869

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