Investigating the Impact of Economic Sanctions Shocks on Foreign Trade of Iran’s Mining Sector (RDCGE Model Approach)

اقتصاد پولی مالی

Articles in Press, Accepted Manuscript, Available Online from 08 January 2025

Document Type: Original Article

DOI: 10.22067/mfe.2025.89454.1444

Authors

Soheil Pourhaji Hosseini¹; Mohammad Taher Ahmadi Shadmehri^{* 2}; Mohammad Hosein Mahdavi Adeli²; Narges Salehnia³

¹Ph. Student in Professor of Economics, Faculty of Administrative and Economic Sciences, Ferdowsi University of Mashhad, Mashhad, Iran

²Professor of Economics, Faculty of Administrative and Economic Sciences, Ferdowsi University of Mashhad, Mashhad, Iran

³Associate Professor of Economics, Faculty of Administrative and Economic Sciences, Ferdowsi University of Mashhad, Mashhad, Iran

Abstract

The necessity of need to reduce dependence on foreign currency income from oil and move towards providing a significant part of the required currency through non-oil exports is felt more. In this regard, paying attention to the mining sector due to its rich and underground reservoirs is a suitable solution to solve this problem. However, the further development of the mining sector in order to achieve economic goals is affected by economic sanctions. Undoubtedly, examining the manner and mechanism of impact of shocks caused by economic sanctions on the country's mining sector can help the officials and economic planners of the country to better face and reduce their negative economic consequences, including reduction in production and added value, reduction in employment, reduction in investment, etc., in the mining sector. Therefore, in this study, for the first time, the effects of shocks caused by economic sanctions (1. the shock of the increase in the exchange rate, 2. the shock of the decrease in the import of raw materials, capital and intermediate goods, 3. the shock of the decrease in crude oil export income and 4. The shock of non-oil export reduction) on foreign trade of Iran's mining sector. For this purpose, the required data was collected from the social accounting matrix and the Recursive Dynamic Computable Equilibrium (RDCGE) model was used to analyze the data. The results showed that among the shocks caused by economic sanctions, in order: the shock caused by the increase in the exchange rate, the shock caused by the decrease in the import of raw materials, capital and intermediate goods, the shock caused by the decrease in crude oil export income and the shock caused by the reduction of non-oil exports have the greatest impact on trade balance of Iran's mining sector.

Keywords

Mining sector; economic sanctions; trade balance; recursive dynamic computable equilibrium (RDCGE) model

References