14.06.2021 New Publication: The Effects of International Sanctions on Iran’s military spending: A Synthetic Control Analysis

In a new study publsihed in Defence and Peace Economics , Professor Farzangean uses the synthetic control method to estimate the effect of international banking and energy sanctions from 2012 to 2015 on Iran’s military spending. Over the entire 2013–2015 period, per capita military spending was reduced by approximately 117 US$ per year on average.

Did the international sanctions imposed on Iran during 2012–2015 lead to a significant decline in Iranian military spending? What would Iran’s military spending have looked like in the absence of international sanctions?

 Farzanegan shows that the trajectories of military spending by the factual Iran and the counterfactual Iran were largely similar before the sanctions of 2012, but diverged significantly after until the implementation of the JCPOA in Jan 2016.

 In this study, Farzanegan implements a counterfactual analysis to study the effects of the 2012 international oil and banking sanctions on Iran’s military spending. The theoretical effects of sanctions on military spending is explained at https://bit.ly/35kJx1y.

 This is the first study which uses a quasi-experimental design to estimate the effect of sanctions on military spending of a target country. Farzanegan finds that over the entire 2013–2015 period, per capita military spending was reduced by approximately 117 US$ per year on average.

Considering the average size of population for post-2012 period in Iran (approximately 77 million), the total average amount of reduction in Iran’s military spending per year is estimated to be approximately 9 billion US$ from 2013 to 2015.

Read the paper via https://bit.ly/35hjJmU (& 50 free online copies https://bit.ly/3xyFISD).