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Coping with oil price shocks ‐ the case of Japan
Author(s) -
BUDD ALAN,
DICKS GEOFFREY
Publication year - 1982
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/j.1468-0319.1982.tb00816.x
Subject(s) - oil price , economics , inflation (cosmology) , price shock , monetary economics , coping (psychology) , economy , macroeconomics , psychology , physics , psychiatry , theoretical physics
The world economy has now suffered two major oil price shocks. Although the percentage increase in 1973‐74 (OPEC I) was much larger than in 1979‐80 (OPEC II). the potential effect on the level of world prices ‐ and hence on the real economy ‐ was about the same in each case. One lesson that was learned from OPEC I was that the impact of the oil price increase on individual economies depended on the policies followed by each country. For example, in the UK the inflation rate rose to 27 per cent in 1975 whereas in West Germany ‐ which was just as dependent on imported oil ‐ inflation rose to 7 per cent. In this Economic Viewpoint we consider the example of one country ‐ Japan ‐ which changed its policies between the two events. As a result it changed from being one of the least successful to being one of the most successful in coping with the oil price increase.