Iranian Journal of Finance

Financial Sanction, Exchange Rate Volatility and Macroeconomic Variables (Case of Iran)

Document Type : Original Article

Authors

Samira Heydarian 1
Mosayeb Pahlavani 2
Seyed Hossein Mirjalili 3

1 Ph.D Candidate in Economics, University of Sistan and Baluchestan. Iran.

2 Associate Prof., Department of Economics, University of Sistan and Baluchestan, Iran.

3 Prof., Department of Economics, Institute for Humanities and Cultural Studies, Iran.

10.61186/ijf.2025.462663.1476
Abstract
Financial sanctions have economic consequences for the oil-dependent economies. We examined the impact of financial sanctions on exchange rate fluctuations and macroeconomic variables in Iran. To this end, we employed a new Keynesian DSGE model. The results indicated that with the shock in foreign exchange, production (Y) and imports initially decreased. Oil production has shown a positive reaction initially and a negative reaction in the medium term, and after 7 periods, the effect of the shock has disappeared. The capital stock (K) also decreased initially, and in two periods, it reacted positively. In the tenth period, its effect disappeared, and in the long term, it became partially negative, and its effect disappeared. The inflation rate has decreased initially, and its effect disappeared over time. Consumption decreased, and after five cycles, the reaction became positive and then disappeared. The interest rate increased initially and then decreased, and in the 10th period, the shock effect disappeared. The exchange rate initially decreased and then increased after one period.

Keywords

Financial Sanction
Exchange Rate
Oil Revenue
Volatility
Macroeconomic Variables
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Iranian Journal of Finance
Volume 9, Issue 2
2025
Pages 70-106

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