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Economic Sanctions, Energy Efficiency, and Environmental Impacts: Evidence from Iranian Industrial Sub-Sectors

Author

Listed:
  • Leyla Jabari

    (Faculty of Economics, Allameh Tabataba'i University, Tehran, Iran)

  • Ali Asghar Salem

    (Thünen Institute of Market Analysis, Braunschweig, Germany)

  • Omid Zamani

    (Department of Agricultural Economics, University of Kiel, Kiel, Germany)

  • Mohammad Reza Farzanegan

    (Philipps-Universität Marburg, Center for Near and Middle Eastern Studies (CNMS), School of Business and Economics, Economics of the Middle East Research Group, Marburg, Germany)

Abstract

Improving energy efficiency is vital for curtailing energy consumption and can have substantial impacts on alleviating carbon emissions. This study investigates the impact of sanctions on Iran's energy efficiency across different industrial sub-sectors from 2015 to 2019. We compute a sanctions index for each industrial sub-sector by using Principal Component Analysis (PCA). This index measures how much each sub-sector has been affected by sanctions. Additionally, energy efficiency is measured using the Directional Distance Function (DDF) method, considering the environmental impacts as undesirable outputs. We examine the effect of the degree of the sanctions indicator on energy efficiency using feasible generalized least squares (FGLS) estimation, controlling for other drivers of efficiency. Our results show a one standard deviation increase in sanctions index results in a decline of about 3% in sub-industrial energy efficiency.

Suggested Citation

  • Leyla Jabari & Ali Asghar Salem & Omid Zamani & Mohammad Reza Farzanegan, 2024. "Economic Sanctions, Energy Efficiency, and Environmental Impacts: Evidence from Iranian Industrial Sub-Sectors," MAGKS Papers on Economics 202403, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
    • Handle: RePEc:mar:magkse:202403
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    File URL: https://uni-marburg.de/en/fb02/research-groups/economics/macroeconomics/research/magks-joint-discussion-papers-in-economics/papers/2024/3-2024-jabari_salem_zamani_farzanegan.pdf
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    More about this item

    Keywords

    Energy efficiency; Directional Distance Function; Sanctions; Sectoral effects; FGLS; Iran;
    All these keywords.

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • L90 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - General

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