Economic Sanctions, Energy Efficiency, and Environmental Impacts: Evidence from Iranian Industrial Sub-Sectors

Leyla Jabari, Ali Asghar Salem, Omid Zamani and Mohammad Reza Farzanegan ()
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Leyla Jabari: Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran
Ali Asghar Salem: Thünen Institute of Market Analysis, Braunschweig, Germany
Omid Zamani: Department of Agricultural Economics, University of Kiel, Kiel, Germany

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: Improving energy efficiency is vital for curtailing energy consumption and can have substantial impacts on alleviating carbon emissions. This study investigates the impact of sanctions on Iran's energy efficiency across different industrial sub-sectors from 2015 to 2019. We compute a sanctions index for each industrial sub-sector by using Principal Component Analysis (PCA). This index measures how much each sub-sector has been affected by sanctions. Additionally, energy efficiency is measured using the Directional Distance Function (DDF) method, considering the environmental impacts as undesirable outputs. We examine the effect of the degree of the sanctions indicator on energy efficiency using feasible generalized least squares (FGLS) estimation, controlling for other drivers of efficiency. Our results show a one standard deviation increase in sanctions index results in a decline of about 3% in sub-industrial energy efficiency.

Keywords: Energy efficiency; Directional Distance Function; Sanctions; Sectoral effects; FGLS; Iran (search for similar items in EconPapers)
JEL-codes: C19 D24 F51 L90 Q41 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2024
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Citations: View citations in EconPapers (1)

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