Macroeconomic policies and the Iranian economy in the era of sanctions

This paper examines the impact of macroeconomic policies on Iranian economy. The study covers time between 1978-2017. results illustrate role money supply and government spending in supporting growth, although contributing to inflationary pressures long run, attesting supply-side constraints. In short-run, have aimed provide support economy face continued fluctuations with oil price spillovers from geopolitical tensions attributed sanctions. exchange rate has played a key absorbing, but at times magnifying adverse effects these tensions. Continued deterioration fundamentals forced an official devaluation as proved be misaligned against backdrop limited capacity Central Bank continue intervene defend stability. meantime, parallel market been flourishing satisfy market’s needs culminated spread rate. A wider signified overvaluation rial major source expectations pressures. Wider demanded frequent interventions by ultimately rate, further increasing negative output given high dependency imports for consumption investment.