The Impact of the Oil Sector on Commodity Prices: Correlation or Causation?
AbstractThe interconnections of agriculture and energy markets have increased through the rise in the new biofuel agribusinesses and the oilâ€“ethanolâ€“corn linkages. The question is whether these linkages have a causal structure by which oil prices affect commodity prices and through these links, instability is transferred from energy markets to already volatile agricultural markets. In this article, we present empirical results using contemporary time-series analysis and Granger causality supplemented by a directed graph theory modeling approach to identify the links and plausible contemporaneous causal structures among energy and commodity variables. The results show that although there is a strong correlation among oil and commodity prices, the evidence for a causal link from oil to commodity prices is mixed.
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Bibliographic InfoArticle provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.
Volume (Year): 42 (2010)
Issue (Month): 03 (August)
ethanol prices; crude oil prices; corn prices; soybean prices; wheat prices; causal structure; Agribusiness; Crop Production/Industries; Environmental Economics and Policy; Production Economics; Research Methods/ Statistical Methods; Resource /Energy Economics and Policy; Q11; Q13; Q42; Q48;
Find related papers by JEL classification:
- Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
- Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
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