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Impacts of Energy Shocks on US Agricultural Productivity Growth and Food Prices —A Structural VAR Analysis

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  • Wang, Sun Ling
  • McPhail, Lihong Lu

Abstract

This study proposes to use a structural VAR model, using annual percentage change series on U.S. gasoline prices, agricultural productivity, real GDP, agricultural exports, and agricultural commodity prices, to assess the impact of energy shocks on U.S. agricultural productivity growth and food price variations. These data span the period 1948 to 2009. Study results indicate that in the short-run (1 year) an energy shock and a productivity shock each accounts equally for 10 percent of the food price volatility. However, the impact from an energy shock overweighs the contribution of a productivity shock in the intermediate term (3 years), where an energy shock’s contribution increases to twice as much as a productivity shock’s contribution (16 percent compared to 8 percent). Besides the specific food market shock, the global demand shock in U.S. agricultural exports is the major factor in explaining the volatility in U.S. food prices, and accounts for one-third of the food price fluctuations.

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Bibliographic Info

Paper provided by Agricultural and Applied Economics Association in its series 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington with number 124892.

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Date of creation: 2012
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Handle: RePEc:ags:aaea12:124892

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Related research

Keywords: Energy shock; Total Factor Productivity (TFP); U.S. agriculture; food price; Structural VAR model; Agricultural and Food Policy; Resource /Energy Economics and Policy;

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  1. Ciaian, Pavel & Kancs, d'Artis, 2011. "Interdependencies in the energy-bioenergy-food price systems: A cointegration analysis," Resource and Energy Economics, Elsevier, vol. 33(1), pages 326-348, January.
  2. Haizhi Tong & Lilyan E. Fulginiti, 2005. "Chinese Regional Agricultural Productivity in the 1990'a," Others 0502012, EconWPA.
  3. Mark Gehlhar & Agapi Somwaru & Peter B. Dixon & Maureen T. Rimmer & Ashley R. Winston, 2010. "Economywide Implications from US Bioenergy Expansion," American Economic Review, American Economic Association, vol. 100(2), pages 172-77, May.
  4. Wang, Sun Ling, 2010. "Is U.S. Agricultural Productivity Growth Slowing?," Amber Waves, United States Department of Agriculture, Economic Research Service, September.
  5. Derek Headey & Shenggen Fan, 2008. "Anatomy of a crisis: the causes and consequences of surging food prices," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 375-391, November.
  6. V. Eldon Ball & Jean‐Pierre Butault & Carlos San Juan & Ricardo Mora, 2010. "Productivity and international competitiveness of agriculture in the European Union and the United States," Agricultural Economics, International Association of Agricultural Economists, vol. 41(6), pages 611-627, November.
  7. Yu, Bingxin & Nin-Pratt, Alejandro, 2011. "Agricultural productivity and policies in Sub-Saharan Africa:," IFPRI discussion papers 1150, International Food Policy Research Institute (IFPRI).
  8. Keith O. Fuglie, 2008. "Is a slowdown in agricultural productivity growth contributing to the rise in commodity prices?," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 431-441, November.
  9. V. Eldon Ball & Jean-Christophe Bureau & Richard Nehring & Agapi Somwaru, 1997. "Agricultural Productivity Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1045-1063.
  10. McPhail, Lihong Lu, 2011. "Assessing the impact of US ethanol on fossil fuel markets: A structural VAR approach," Energy Economics, Elsevier, vol. 33(6), pages 1177-1185.
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