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Do oil sanctions reduce Dutch disease phenomenon? A quasi-experimental approach evidence from Iran.
- Source :
- International Economics & Economic Policy; May2024, Vol. 21 Issue 2, p385-410, 26p
- Publication Year :
- 2024
-
Abstract
- Economists have hypothesized that currency appreciation resulting from oil production in oil-rich countries can suppress the production of tradable goods, a phenomenon known as Dutch disease, often assessed using econometric models. This study leverages sanctions on Iranian oil exports, employing a quasi-experimental design with two distinct periods (1959–2020): one marked by sanctions (oil revenue recession) and the other by non-sanctions (oil revenue boom). The result shows a reversal of the Dutch disease effect during sanctions, leading to a real depreciation of the national currency and heightened production of tradable goods over non-tradable ones. The observed pattern of the real exchange rate aligns with Dutch disease dynamics, depreciating during sanctions and appreciating during non-sanction periods. Furthermore, the tradable sector exhibited increased share and real output growth compared to the non-tradable sector during the sanction period. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 16124804
- Volume :
- 21
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- International Economics & Economic Policy
- Publication Type :
- Academic Journal
- Accession number :
- 176688580
- Full Text :
- https://doi.org/10.1007/s10368-024-00584-1