ABSTRACT
In Chapter 2 an analytical framework was developed for estimating the impact of oil import price shocks on the structure and level of domestic prices, assuming a fixed-coefficient input-output technology. In this chapter, the model of Chapter 2 is extended by allowing for substitution relations. Specifically, interfuel substitution between coal, refined petroleum products, electricity, and natural gas is added to the model. The model developed here is therefore a longer-run version of the previous model in the sense that energy related input adjustments caused by the higher price of oil are captured.
