Economic Sanctions and Misery Index in Provinces of Iran A Spatial Panel Approach

Document Type : RESEARCH PAPER

Authors

1 Ph.D. Candidate, Faculty of Economic and Social Sciences, Bu-Ali Sina University of Hamedan, Hamedan, Iran,

2 Assistant Professor, Faculty of Economic and Social Sciences, Bu-Ali Sina University of Hamedan, Hamedan, Iran,

3 Associate Professor, Faculty of Economic and Social Sciences, Bu-Ali Sina University of Hamedan, Hamedan, Iran

Abstract

Iran has been subjected to international sanctions continuously throughout the past four decades, impacting various aspects of its economy and society. This study utilizes comprehensive provincial data spanning the period from 2006 to 2021 to thoroughly investigate the consequences of economic sanctions on the misery index, employing a spatial panel data framework to capture both temporal and regional variations. To accurately assess the intensity and effects of these sanctions, the analysis incorporates fuzzy logic alongside three key macroeconomic indicators: the inflation rate, unemployment rate, and per capita Gross Domestic Product (GDP). The empirical results clearly demonstrate that economic sanctions have a strong positive and statistically significant effect on increasing the misery index, signaling worsening economic conditions. Conversely, other crucial variables including per capita GDP, capital stock, government size, and human capital exhibit significant negative effects, thereby contributing to a reduction in the misery index and mitigating economic distress. Although population growth shows a negative impact on the misery index, this effect is statistically insignificant. Further coefficient analysis reveals that the intensity and reach of sanctions alone do not fully dictate the economic outcomes across regions; rather, internal factors such as effective domestic management, robust government institutional structures, public investment levels, and the quality of human capital critically influence the misery index. Moreover, the study finds a positive and significant spillover effect of the misery index between provinces, highlighting important spatial dependencies. The findings also reveal substantial heterogeneity in the impact intensity of sanctions across different provinces, primarily due to structural disparities, varying economic capacities, and specific regional constraints. This nuanced understanding aids in tailoring more effective regional economic policies under sanctions.

Keywords

References

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