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The Relationship Between Fuel, Biofuel and Food Prices: Methods and Outcomes

Author

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  • Karel Janda

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic
    Department of Banking and Insurance, Faculty of Finance and Accounting, University of Economics, Namesti Winstona Churchilla 4, 13067 Prague, Czech Republic)

  • Ladislav Kristoufek

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Smetanovo nabrezi 6, 111 01 Prague 1, Czech Republic)

Abstract

We assess the fuel-food price linkage models of the structural and of the time series nature with the main attention devoted to the time series literature. We document shifting focus from a straightforward vector autoregressive and error-correction analysis of fuel-food commodity price level co-movement towards inclusion of biodiesel and ethanol prices directly into analysis, towards consideration of both price levels and price volatilities, and towards growing sophistication of econometric methodologies and integration of econometrics of price co-movement with theoretical considerations. The key insight of biofuels price transmission literature is that the price transmission is time and market specific, evolving with the development of biofuels policies and technologies. The most prominent relationships are coming from oil to agricultural commodities and then towards biofuels. While here are also studies not finding any strong connection between biofuels and their feedstock, the literature finding biofuels driving the prices of agricultural commodities up is negligible.

Suggested Citation

  • Karel Janda & Ladislav Kristoufek, 2018. "The Relationship Between Fuel, Biofuel and Food Prices: Methods and Outcomes," Working Papers IES 2018/32, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2018.
    • Handle: RePEc:fau:wpaper:wp2018_32
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    More about this item

    Keywords

    biofuels; fuels; food; ethanol; biodiesel; oil;
    All these keywords.

    JEL classification:

    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth

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