International Journal of Nonlinear Analysis and Applications

The effects of economic sanctions on Iran's employment and economic growth according to the Markov switching model

Document Type : Research Paper

Authors

1 Department of Economics, Arak Branch, Islamic Azad University, Arak, Iran.

2 Department of Economics, Arak Branch, Islamic Azad University, Arak, Iran

3 Department of Economics, Faculty of Social and Economic Sciences, Bu-Ali Sina University, Hamadan, Iran.

4 Department of Business Management, Arak Branch, Islamic Azad University, Arak, Iran

Abstract

The improvement of employment and economic growth is an important economic goal of any country but its achievement is a big challenge without considering the effects of economic sanctions on Iran's economy. Therefore, the present research estimated the direct effect of economic sanctions on employment and economic growth of Iran from 1984 to 2020 using the Markov switching method. The appropriate index was first calculated for sanctions, using the factor analysis method during the target period. After finding the quantitative values of sanctions in different periods, the employment and economic growth models were defined using the Markov switching method. In this regard, employment and economic growth could be divided into two regimes, including Regime (1) with low mean and high standard deviation and regime (2) with high mean and low standard deviation. The results of estimating Markov switching models indicated that sanctions had negative effects on employment but they had no significant effect on economic growth. The results also indicated stable employment in the low regime and economic growth in the high regime.

Keywords

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International Journal of Nonlinear Analysis and Applications
Volume 15, Issue 5
May 2024
Pages 23-34
  • Receive Date: 17 November 2021
  • Revise Date: 04 January 2022
  • Accept Date: 11 February 2022