Oil Price Fluctuations and Oil Consuming Sectors: An Empirical Analysis of Japan

19 Pages Posted: 8 Oct 2015

See all articles by Farhad Taghizadeh Hesary

Farhad Taghizadeh Hesary

Waseda University

Ehsan Rasoulinezhad

Saint Petersburg State University

Yoshikazu Kobayashi

The Institute of Energy Economics, Japan (IEEJ)

Date Written: July 2015

Abstract

Since the oil price shocks of the 1970s, several studies have found significant impacts of oil prices on macro variables. However, it is particularly crucial to know how each micro sector in an economy, such as the residential, transport, industrial and non-energy sectors, respond to oil price impulses. In this research, we try to shed light on the impact of crude oil price volatility on each sector in Japan, the world’s third-largest crude oil consumer. In order to do so, we apply a vector auto regression model and perform impulse response analysis by using quarterly data from Q1 1990 to Q1 2014. The findings indicate that some economic sectors, such as the residential sector, did not have significant sensitivity to the sharp oil price fluctuations. In contrast, some other sectors, like the commercial, industrial, and transport sectors, were strongly sensitive to the drastic oil price fluctuations. Moreover, our findings show that after the Fukushima disaster in 2011, which led to the shutdown of nuclear power plants in Japan, because of greater reliance on oil imports, the sensitivity of most sectors to oil price volatility declined.

Keywords: oil price fluctuations, oil shocks, energy sectors, Japan, Oil Consuming Sectors

JEL Classification: C32, O49, Q43

Suggested Citation

Taghizadeh Hesary, Farhad and Rasoulinezhad, Ehsan and Kobayashi, Yoshikazu, Oil Price Fluctuations and Oil Consuming Sectors: An Empirical Analysis of Japan (July 2015). ADBI Working Paper 539. Available at SSRN: https://ssrn.com/abstract=2670444 or http://dx.doi.org/10.2139/ssrn.2670444

Farhad Taghizadeh Hesary (Contact Author)

Waseda University ( email )

1-6-1 Nishi-Waseda,
Shinjuku, Tokyo 169-8050
Japan

Ehsan Rasoulinezhad

Saint Petersburg State University ( email )

7-9, Universitetskaya nab.
Saint Petersburg, 199034
Russia

Yoshikazu Kobayashi

The Institute of Energy Economics, Japan (IEEJ) ( email )

Inui Bldg.,Kachidoki,10th,11th,,16th Floor 13-1
Kachidoki 1-chome,Chuo-ku
Tokyo 104-0054
Japan

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
39
Abstract Views
553
PlumX Metrics