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Quantifying the risk of an increase in the prices of non-energy products by combining the portfolio and input-output approaches

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  • Suzuki, Kengo
  • Uchiyama, Yohji

Abstract

An increase in the price of imported fossil fuels indirectly increases the producer price in non-energy sectors; however, this indirect influence cannot be taken into account by the traditional portfolio approach. This study proposes an analytical framework combining the input-output (I-O) model and the portfolio approach that can take the indirect influence into account. A risk of an increase in the producer price in Japanese non-energy sectors during the period 1970-2000 is estimated, and the causes of a decrease in the risk through the analysis period are clarified by decomposing an index of the risk. The result indicates that almost all non-energy sectors have decreased this risk during the analysis period. The degree and cause of the decrease depends on a sector's location in the hierarchical structure of Japanese industries. For example, assembly sectors have decreased their risk mainly as the result of improvement in energy usage by upstream sectors, such as material sectors, rather than their own improvements. Proper policies considering such a structure are required to decrease the risk further because the effort taken to do so is seldom motivated by economic profit.

Suggested Citation

  • Suzuki, Kengo & Uchiyama, Yohji, 2010. "Quantifying the risk of an increase in the prices of non-energy products by combining the portfolio and input-output approaches," Energy Policy, Elsevier, vol. 38(10), pages 5867-5877, October.
    • Handle: RePEc:eee:enepol:v:38:y:2010:i:10:p:5867-5877
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    2. Sun, Mei & Gao, Cuixia & Shen, Bo, 2014. "Quantifying China's oil import risks and the impact on the national economy," Energy Policy, Elsevier, vol. 67(C), pages 605-611.
    3. Månsson, André & Johansson, Bengt & Nilsson, Lars J., 2014. "Assessing energy security: An overview of commonly used methodologies," Energy, Elsevier, vol. 73(C), pages 1-14.
    4. Satoshi Nakano & Sonoe Arai & Ayu Washizu, 2017. "Economic impacts of Japan’s renewable energy sector and the feed-in tariff system: using an input–output table to analyze a next-generation energy system," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(3), pages 555-580, July.
    5. Mirshojaeian Hosseini, Hossein & Majed, Vahid & Kaneko, Shinji, 2014. "The Inflationary Impact of Energy Subsidy Reform in Iran," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 9(2), pages 64-85, October.
    6. Hossein Mirshojaeian Hosseini & Shinji Kaneko, 2012. "A general equilibrium analysis of the inflationary impact of energy subsidies reform in Iran," IDEC DP2 Series 2-8, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).

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