Pass-Through of Oil Prices to Japanese Domestic Prices

Etsuro Shioji and Taisuke Uchino

in Commodity Prices and Markets

Published by University of Chicago Press

Published in print March 2011 | ISBN: 9780226386898
Published online February 2013 | e-ISBN: 9780226386904 | DOI:
Pass-Through of Oil Prices to Japanese Domestic Prices

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This chapter studies the effects of oil prices on domestic prices using Japanese data. This Japanese data was studied using time series analysis techniques and it confirmed the tendency of a declining pass-through of oil prices to domestic prices, for the period 1980 to 2000. Investigation of the Japanese input–output tables reveals that changes in the cost structure alone go a long way toward explaining the declining pass-through. The analysis indicates that the main reason behind the changing cost structure was not due to substitution effects or changes in relative quantities. It was rather due to changes in the relative prices and these played a more important role. A detailed analysis of the Japanese input–output table for the 2000s is also carried out. The results based on the time-varying parameter-vector autoregression are presented and are compared with the results of the input–output table results for the period 1980 to 2000.

Keywords: oil prices; cost structure; Japanese domestic prices; time series analysis; domestic prices

Chapter.  13471 words.  Illustrated.

Subjects: Business and Management

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