Investigating the Effects of Economic Sanctions on Economic Growth and Health Status: A New Keynesian model

Document Type : Original Article

Authors

1 Ph.D., Candidate, Department of Economics, Faculty of Economics and Management, Shiraz Branch, Islamic Azad University, Shiraz, Iran.

2 Associate Professor, Department of Economics, Faculty of Economics and Management, Shiraz Branch, Islamic Azad University, Shiraz, Iran.

Abstract

Economic sanctions, regardless of their success, have profound and detrimental impacts on multiple sectors of affected societies, including economic performance and public health. Iran has been subjected to prolonged sanctions imposed by the United States, the United Nations, and the European Union. Therefore, considering the significance of the issue the motivation of this study was to analyze the effects of economic sanctions on Iran’s economic growth and health status using a dynamic stochastic general equilibrium (DSGE) model within a Bayesian framework. The analysis employs seasonally adjusted data spanning from March 21, 2001, to June 22, 2022, covering variables such as GDP (with and without oil), consumption and investment expenditures, government spending, central bank foreign reserves, oil revenues, and money growth rates.
The results indicate that sanctions shocks significantly reduce oil revenues, which undermines government budgets heavily reliant on these funds, leading to budget deficits and increased monetary expansion. This monetary response causes inflation, reduces real wages and interest rates, and diminishes incentives for health investments. Consequently, reduced physical activity hours lead to a decline in overall health status. Based on these findings, it is recommended that policy measures focus on decreasing the government’s dependence on oil revenues by utilizing existing capacities.

Keywords

References

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اقتصاد دفاع و توسعه پایدار
Volume 10, Issue 37
September 2025
Pages 69-89

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