Oil price shocks, protest, and the shadow economy: Is there a mitigation effect?

Ishak, Phoebe W.; Farzanegan, Mohammad Reza

doi:10.1111/ecpo.12199

Cited by 18 publications

(7 citation statements)

References 77 publications

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“…Shadow economy activity also significantly decreased by more than 30 percentage points, suffering more from the sanctions than the formal economy [3]. When the formal part of the economy is under increased pressure, a declining informal economy may endanger the political stability of a country, increasing the risk of internal conflict [4,5].…”

Section: Introductionmentioning

confidence: 99%

Lifting of International Sanctions and the Shadow Economy in Iran—A View from Outer Space

Farzanegan

Fischer

2021

Remote Sensing

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With the implementation of the Joint Comprehensive Plan of Action (JCPOA) in 2016, Iran experienced a short period without international sanctions which resulted in an annual increase in the gross domestic product (GDP) in the following two years. However, it was not just the formal economy that was affected by the sanctions. Previous studies have shown that sanctions can negatively affect the shadow (or informal) economy and may even have a larger impact on the informal economy than on the formal economy. Nighttime lights (NTL) data allow us to study shadow economy activities that are not reported in the official GDP. This study uses a panel of NTL (the DMSP/OLS and VIIRS/DNB harmonized dataset) from 1992 to 2018 for 31 Iranian provinces to investigate the association between the lifting of sanctions and the growth of the shadow economy. The empirical results suggest an increase in shadow economy activity with the lifting of sanctions while controlling for other drivers of informal activities.

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Section: Introductionmentioning

confidence: 99%

Lifting of International Sanctions and the Shadow Economy in Iran—A View from Outer Space

Farzanegan

Fischer

2021

Remote Sensing

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“…In short, economic agents in Iran are learning to live with sanctions and thus trying to learn from the lessons of past experiences. During sanctions, the government also tries to increase the share of tax revenues (due to the decrease in oil exports due to sanctions) and thus is more engaged in tax reforms and managing the shadow economy and tax evasion (which has proven to be a demanding political task, see Ishak & Farzanegan, 2020, 2022). The incentive to reform the subsidies is also higher during the imposed sanctions.…”

Section: Discussionmentioning

confidence: 99%

Firms persistence under sanctions:Micro‐levelevidence from Iran

2023

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Given the importance of firm strategic management in the time of crisis, this study investigates Micro, Small and Medium Enterprises (MSMEs) approaches to persistence during the international sanctions against Iran. Using data from a questionnaire of 486 firms between December 2019 and September 2020, we found that reducing research and development (R&D) expenditures, marketing costs and fixed/overhead costs and investing in information technology (IT) are positively related to firm persistence. Conversely, managerial decisions to reduce production and cut or freeze staff pay have negative and significant impacts on a firm's ability to persist during sanctions. Moreover, micro‐firms are more resilient than their small and medium counterparts. The findings also confirm that age has a significant and positive impact on firm persistence. Finally, the results show that having a business plan, access to finance and technology, owner education, export orientation, business networking and consulting services are the key drivers of withstanding pressure from sanctions.

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“…For a sensitivity check, we also use data from the Cross-National Time-Series Data Archive (CNTS) (Banks & Wilson, 2021) to construct our protest indicator. Following Ishak and Farzanegan (2021), we select three indicators for less violent events of instability: antigovernment demonstrations, general strikes, and riots. Our measure of protests is a count variable (in logs) of the number of demonstrations, strikes, and riots that occurred in a country in a given year and captures the magnitude of the instability.…”

Section: Methodsmentioning

confidence: 99%

“…Given the negative effects of political instability on the economic performance and welfare of societies, several economic and political researchers have attempted to understand its determinants (e.g. Bjorvatn & Farzanegan, 2015;Farzanegan & Witthuhn, 2017;Farzanegan et al, 2018;Ishak & Farzanegan, 2021). In terms of internal instability (or internal conflicts), the literature shows that a wide range of social, economic and political factors, such as corruption, income inequality, natural resource rents, degree of ethnic fractionalization, economic development, youth unemployment rate, share of youth population, the level of democracy and trade openness, are important determinants.…”

Section: Introductionmentioning

confidence: 99%

COVID-19 Fatalities and Internal Conflict: Does Government Economic Support Matter?

Farzanegan¹,

Gholipour

2021

SSRN Journal

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In this study, we look at the association between COVID-19 fatality rate and internal conflict, highlighting the importance of government economic support under the pandemic as a moderating factor. Our main hypothesis implies that increased COVID-19 fatality rates are likely to be positively associated with internal conflict in countries with lower levels of government economic support. Our empirical analysis confirms this prediction: employing cross-country data for more than 100 countries, the estimation results demonstrate that the positive effect of COVID-19 fatality rates on internal conflict may become insignificant with higher levels of government economic support. In countries where government spending in response to the pandemic is less than 5 to 6% of GDP, there is a significant risk of internal conflict resulting from increased COVID-19 fatality rates. Our main findings hold when we control for the effects of other socioeconomic determinants relating to pre-pandemic internal political stability and alternative measures of conflict.

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Oil price shocks, protest, and the shadow economy: Is there a mitigation effect?

Cited by 18 publications

References 77 publications

Lifting of International Sanctions and the Shadow Economy in Iran—A View from Outer Space

Lifting of International Sanctions and the Shadow Economy in Iran—A View from Outer Space

Firms persistence under sanctions:Micro‐levelevidence from Iran

COVID-19 Fatalities and Internal Conflict: Does Government Economic Support Matter?

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