The Effect of the Reimposition of U.S. Economic Sanctions Following the Withdrawal from the JCPOA on Iran’s Manufacturing Production Index: A Synthetic Difference-in-Differences (SDID) Approach

Document Type : applicative

Authors

1 M.A. Student in Theoretical Economics, Department of Theoretical Economics, Faculty of Economics, Allameh Tabataba’i University, Tehran, Iran

2 Department of Theoretical Economics,Faculty of Economics , Allameh Tabatabai University

10.30473/jier.2026.79342.1565

Abstract

The U.S. withdrawal from the JCPOA in 2018 and the subsequent reimposition of economic sanctions constituted a major shock to Iran’s manufacturing sector. This study estimates the effect of this shock on Iran’s manufacturing production index. Using quarterly UNIDO industrial production data, the study applies the Synthetic Difference-in-Differences (SDID) method. Iran is the treated unit, with 65 countries forming the donor pool. The baseline specification defines 2011-Q2–2018-Q3 as the pre-treatment period, 2018-Q4 as a transition quarter, and the first three quarters of 2019 as the post-treatment period. The results indicate that the reimposition of sanctions reduced Iran’s manufacturing production by about 8.74 percent relative to its estimated counterfactual path. In the in-space placebo test, Iran ranks first in absolute effect size among 66 countries, with a rank-based p-value of 0.0152. Robustness checks support the stability of the negative estimated effect Robustness checks support the stability of the negative estimated effect

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History

  • Receive Date: 04 September 2026
  • Revise Date: 20 September 2026
  • Accept Date: 26 October 2026

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