Iranian Oil Embargo: A Dynamic Stochastic General Equilibrium Model-Based Analysis

The EU imposed an embargo on Iranian oil on 23 January, 2012 that came into full force in July, preventing the EU members from importing Iranian oil. The embargo was enforced by the UN, EU, USA and other countries in the wake of Western pressure policies. This multiplies sanctions imposed on Iran since 1979. Evidence so far suggests that the previous sanctions worldwide and those imposed on Iran have failed to achieve the expected results. Proposing different scenarios, the study investigates possible consequences of Iranian oil embargo on Iran’s economy and that of the world. Besides, we present a two country Dynamic Stochastic General Equilibrium (DSGE) model (a theoretical frame work) to show how Iranian oil embargo can affect Iranian and world economy. The results reveal that Iranian oil embargo is a lose-lose strategy and will harm both sides

Oil Embargo, Dynamic Stochastic General Equilibrium