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Investigating the Effect of Foreign Sanctions on the Level of Foreign Payments of the Islamic Republic of Iran: The Approach of Dynamic Systems

Saeed Iranmanesh (), Noorullah Salehi Asfiji () and Abdul Majid Jalaee Esfandabadi ()
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Saeed Iranmanesh: PhD student in International Economics, Shahid Bahonar University
Noorullah Salehi Asfiji: Assistant Professor of Economics, Kerman Shahid Bahonar University
Abdul Majid Jalaee Esfandabadi: Professor of Economics, Kerman Shahid Bahonar University

Quarterly Journal of Applied Theories of Economics, 2021, vol. 8, issue 2, 75-106

Abstract: Since the victory of the Islamic Revolution in Iran, the United States, the European Union, and the United Nations Security Council have imposed a wide range of sanctions on the Islamic Republic of Iran. These sanctions, for political and economic purposes, have affected various areas. One of the main areas affected by these sanctions is the external balance of payments. The purpose of this article is to study the effects and consequences of economic sanctions on the balance of foreign payments in Iran. In order to make a comprehensive study about this goal, the foreign trade model of the Islamic Republic of Iran was simulated using the dynamic systems approach. In addition, in order to quantify the economic effects of sanctions, the opinions of 15 economics experts on sanctions were collected in the form of fuzzy questionnaires and using the fuzzy logic method, the sanctions index variable was obtained. The period of this research is 1979-2017. By imposing economic sanctions on the foreign trade model in the form of 4 scenarios, different dimensions of economic sanctions were examined. The results show that the sanctions imposed on the Islamic Republic of Iran through the export channel have posed the greatest risks to the foreign balance of the Islamic Republic of Iran. Accordingly, serious attention to the development of exports in Iran is an important principle to reduce the risks of economic sanctions. In addition, the economic consequences of sanctions can be reduced by using trade agreements and selecting strategic partners among the countries in the region.

Keywords: external balance of payments; economic sanctions; fuzzy logic; dynamic systems (search for similar items in EconPapers)
JEL-codes: C61 C69 F51 F59 (search for similar items in EconPapers)
Date: 2021
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