Analysis of the impact of the decline in crude oil imports on the Japanese economy

This study analyzes the impact of the decrease in crude oil imports on the Japanese economy. In Japan, the use of crude oil depends almost exclusively on imports. Thus, guaranteeing crude oil imports is an important issue. In order to analyze the impact of the decrease in crude oil imports by considering two features of crude oil, namely as a factor of production and as feedstock, this study uses the GTAP and GTAP-E models, respectively, following the same methodology and applying the same exogenous values. This study will try, too, to use both the static analysis and the analysis incorporating the capital accumulation effects. The difference in the simulation results of the GTAP and GTAP-E models in terms of Japan’s real GDP is relatively small. However, the simulation results concerning trade show different tendencies. In general, the energy substitution structure of the GTAP-E model makes it suitable for analyzing energy goods. However, when energy goods are used mainly as feedstock, as in the case of crude oil in petroleum and coal products, the GTAP model presents results that are more realistic by treating energy goods as intermediate inputs. Thus, it is better to use the GTAP model to analyze the impact of the decrease in crude oil imports on the Japanese economy, while referring to the results of the GTAP-E model, which treats energy goods as factors of production.