Analysis of Electric Supply Shortage and Change in a Factor of Production in Japan caused by Earthquakes using the GTAP-E Model

Akiko Higashi

No 332630, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: This study analyzes the impact on the Japanese economy of an electric supply shortage caused by earthquakes, using the GTAP-E model. To verify that the simulation undertaken with the GTAP-E model can reproduce the impact seen in the real world, this study uses Japanese data concerning the electric supply shortage and capital stock in 2011—the year in which the Great East Japan Earthquake occurred—as exogenous values. Thereafter, this study compares the simulation results with Japanese macroeconomic data from 2011. In chapter 2, we analyze Japanese time-series data concerning the electric supply and macroeconomy. The results of the data survey described in this chapter indicate that in 2011, the total size of the electric supply in Japan fell by 4.57%, while Japan’s total capital stock fell by around 1.1%. Chapter 3 discusses in detail the structure of the substitution between capital and energy goods in the GTAP-E model. Burniaux and Truong (2002) explain in GTAP Technical Paper No. 16 that to estimate the values of the final elasticity of substitution (which in GTAP Technical Paper No. 16 is called the “outer” elasticity of substitution) between capital and the energy composite, we can use the formula for the case of a nested CES structure derived from Keller (1980). This formula uses the given substitution elasticity (which in GTAP Technical Paper No. 16 is called the “inner” elasticity of substitution) between capital and energy, the given substitution elasticities between the primary factors, and the cost share of the capital and energy composite. GTAP Technical Paper No. 16 shows that although most industries are characterized as having an overall complementary relationship between energy and capital, “electricity” in the United States and “electricity,” “ferrous metals,” and “chemical, rubber, plastic products” in Japan are characterized as having overall substitutional relationships. Chapter 3 of this paper estimates the values of the overall (“o...

Keywords: Resource/Energy; Economics; and; Policy (search for similar items in EconPapers)
Date: 2015
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