Early Phase Success and Long Run Failure of Economic Sanctions: With an Application to Iran
Institute of Social Studies Working Paper No. 544
44 Pages Posted: 3 Jun 2012 Last revised: 4 Jun 2012
Date Written: June 2, 2012
We develop a model of the dynamics of economic sanctions in conjunction with the response of the sanction target. We apply this model to the case of the EU and US boycott of Iranian oil. Our VAR model finds significant impacts of sanctions both on key economic variables and on the political system. These effects, however, are limited in time and occur in the first two to four years of the sanction episode only because adjustment of economic structures mitigates the economic and political impact of the sanctions.
Keywords: Vector autoregressive model, sanctions, Iran
JEL Classification: F11, F51
Suggested Citation: Suggested Citation