MACRO-IMPACTS OF OIL PRICE CHANGES: A CGE ANALYSIS OF THE JAPANESE ECONOMY

Abstract

Using a computable general equilibrium (CGE) model of Japan that integrates real and financial sectors, this paper quantitatively evaluates impacts of oil price changes on the Japanese economy in both industrial and macro levels. The integration of real and financial sectors is a new attempt in the field of CGE studies, which makes it possible to analyze not only such real aspects of industrial production and GDP growth but also such monetary aspects as inflation and foreign exchange rate. Impacts of oil price changes are analyzed by comparative statics in 1982. Results are summarized as eight implications on macro fundamental variables, industrial productions and prices, and structural and technological changes.