A Computable General Equilibrium Model of International Sanctions

Mohammad Reza Gharibnavaz and Robert Waschik

No 332633, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: We detail recent international sanctions against the Iranian economy and its government imposed by a subset of developed countries. The effects of these sanctions on the Iranian economy in general and upon upper- and lower-income rural and urban Iranian households, as well as the Iranian government, are modelled using a Computable General Equilibrium (CGE) model. We begin with the benchmarked equilibrium dataset for Iran extracted from the GTAP8 (2007) database. Since we are interested in the effects of international sanctions on the Iranian government as well as differentiated households in Iran, we supplement the GTAP8 dataset using income and expenditure shares from the Urban and Rural Household Income and Expenditure Survey from the Statistical Center of Iran (SCI). The model is calibrated to simulate the effects of international sanctions as closely as possible. We use endogenous trade taxes to simulate the effects of sanctions on Iranian oil and petrochemical exports and Iranian imports of petroleum products, metal products and motor vehicles. We also use an endogenous tax on oil purchases by the Iranian government to incorporate the stockpiling of Iranian oil by the Iranian government after international sanctions are imposed on Iranian oil exports. Results suggest that international sanctions reduced aggregate Iranian welfare by 6-7 percent. Rural households in Iran suffered welfare losses which were almost double those experienced by urban households, and the poorest urban and rural households experienced the largest welfare losses: almost 5 percent and 9 percent by the lowest-income urban and rural households, respectively. But the Government of Iran sees a welfare loss of 25-30 percent, due to the large negative effect of sanctions on the Iranian oil sector. These welfare losses are exacerbated by the Iranian governments stockpiling of Iranian oil. ...

Keywords: International Relations/Trade; Research Methods/Statistical Methods (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/332633/files/7382.pdf (application/pdf)

Related works:
Working Paper: A Computable General Equilibrium Model of International Sanctions (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332633

Access Statistics for this paper

More papers in Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().