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Faculty of Economics

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Laudati, D. and Pesaran, M. H.

Identifying the Effects of Sanctions on the Iranian Economy using Newspaper Coverage


Abstract: This paper considers how sanctions affected the Iranian economy using a novel measure of sanctions intensity based on daily newspaper coverage. It finds sanctions to have significant effects on exchange rates, inflation, and output growth, with the Iranian rial over-reacting to sanctions, followed up with a rise in inflation and a fall in output. In absence of sanctions, Iran’s average annual growth could have been around 4-5 per cent, as compared to the 3 per cent realized. Sanctions are also found to have adverse effects on employment, labor force participation, secondary and high-school education, with such effects amplified for females.

Keywords: Newspaper coverage, identification of direct and indirect effects of sanctions, Iran output growth, exchange rate depreciation and inflation, labor force participation and employment, secondary education, and gender bias

JEL Codes: E31 E65 F43 F51 F53 O11 O19 O53

Author links: M. Hashem Pesaran  


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