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Causes of the Great Food Commodity Price Booms in the New Millennium: An Essay in Honor of Gordon Rausser

In: Modern Agricultural and Resource Economics and Policy

Author

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  • Harry Gorter

    (Cornell University)

Abstract

The doubling of corn prices in 2006–2007 and tripling of grain/oilseed prices in 2007–2008, 2010–2011 and 2012–2013 represent the most dramatic price booms in history with no busts. This can only be explained by a new paradigm, namely the advent of a corn-ethanol price link caused by biofuel policies. While all other economists erroneously explained prices with traditional methodologies. Rausser distinguished himself by changing his mind and adopting the new method outlined in this paper. To explain economists resistance to adopting new models of price determination, I use basic principles of sociology (need to conform and imitate), behavioral economics (esp. confirmation bias and conservatism) and economics (naked self-interest). I show how Rausser did not succumb to sclerotic thinking so common in Homo Academicus where the coziness of the Academic-Civil-Industrial Complex prevails. I thereby trace the characteristics of what makes up such a great economist, including those that Keynes noted that make up a master economist. I conclude Rausser is a legend in our profession.

Suggested Citation

  • Harry Gorter, 2022. "Causes of the Great Food Commodity Price Booms in the New Millennium: An Essay in Honor of Gordon Rausser," Natural Resource Management and Policy, in: Harry de Gorter & Jill McCluskey & Johan Swinnen & David Zilberman (ed.), Modern Agricultural and Resource Economics and Policy, pages 415-439, Springer.
    • Handle: RePEc:spr:nrmchp:978-3-030-77760-9_17
    DOI: 10.1007/978-3-030-77760-9_17
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    More about this item

    Keywords

    A14; Q02; D90; Q41;
    All these keywords.

    JEL classification:

    • A14 - General Economics and Teaching - - General Economics - - - Sociology of Economics
    • Q02 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Commodity Market
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices

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