NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Pass-Through of Oil Prices to Japanese Domestic Prices

Etsuro Shioji, Taisuke Uchino

NBER Working Paper No. 15888
Issued in April 2010
NBER Program(s):   EFG   IFM

In this paper, we investigate changes in the impacts of world crude oil prices on domestic prices in Japan. First, we employ a time-varying parameter VAR (TVP-VAR) approach to confirm that the rate of pass-through of oil prices declined, both at the aggregate and sectoral levels, for the period 1980-2000. Second, by utilizing Input-Output Tables, we find that changing cost structure of Japanese firms goes a long way toward explaining this decline. That is, by the year 2000, oil had become a much smaller component of the Japanese production cost structure. We further find that much of this is attributable to changes in relative prices: as oil became cheaper, it became less important in the overall cost structure, and thus pricing behaviors of firms became less responsive to its prices. Substitution effects, namely firms’ shifts toward less oil intensive production, on the other hand, appear to be less important. We also study the period 2000-2007. We find that, although pass-through rates of oil prices increase in many instances, those increases are small in comparison to the drastic resurgence of oil in the cost structure of firms. We present some possible explanations for this finding.

download in pdf format
   (643 K)

email paper

This paper is available as PDF (643 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15888

Published: Pass-Through of Oil Prices to Japanese Domestic Prices, Etsuro Shioji, Taisuke Uchino. in Commodity Prices and Markets, East Asia Seminar on Economics, Volume 20, Ito and Rose. 2011

Users who downloaded this paper also downloaded these:
Fukunaga, Hirakata, and Sudo w15791 The Effects of Oil Price Changes on the Industry-Level Production and Prices in the U.S. and Japan
Shioji and Uchino Pass-Through of Oil Prices to Japanese Domestic Prices
Hamilton w16186 Nonlinearities and the Macroeconomic Effects of Oil Prices
Benigno and Faia w15842 Globalization, Pass-Through and Inflation Dynamic
Lee and Song w15306 Nature of Oil Price Shocks and Monetary Policy
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us