Advanced Search
MyIDEAS: Login to save this paper or follow this series

Food, Energy and Environment : is Bioenergy the missing link?

Contents:

Author Info

  • Pavel Ciaian
  • d'Artis Kancs

Abstract

The present paper studies price linkages between the food, energy and bioenergy markets. We develop a vertically integrated multi-input, multi-output market model with two price transmission channels: a direct biofuel channel and an indirect input channel. We test the theoretical hypothesis by applying time-series analytical mechanisms to nine major traded agricultural commodity prices, including corn, wheat, rice, sugar, soybeans, cotton, banana, sorghum and tea, along with one weighted average world crude oil price. The data consists of 939 weekly observations from January 1993 to December 2010. The empirical findings confirm the theoretical hypothesis that the prices for crude oil and agricultural commodities are interdependent. Commodities not directly used in bioenergy production are also included in the analysis: a USD 1/barrel increase in oil prices and agricultural commodity prices increase by between USD 0.09/tonne and USD 1.65/tonne. Contrary to the theoretical predictions, the indirect input price transmission channel is found to be small and statistically insignificant.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.econ.kuleuven.be/licos/publications/dp/dp292.pdf
Download Restriction: no

Bibliographic Info

Paper provided by LICOS - Centre for Institutions and Economic Performance, KU Leuven in its series LICOS Discussion Papers with number 29211.

as in new window
Length:
Date of creation: 2011
Date of revision:
Handle: RePEc:lic:licosd:29211

Contact details of provider:
Postal: De Bériotstraat 34, B-3000 Leuven
Phone: +32 (0) 16 / 32 6598
Fax: +32 (0) 16 / 32 6599
Email:
Web page: http://www.econ.kuleuven.be/licos
More information through EDIRC

Related research

Keywords: Energy; bioenergy; crude oil; prices; food; renewable fuels; cointegration.;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Salem M. Abo-Zaid, 2009. "Sticky Wages, Incomplete Pass-Through and Inflation Targeting: What is the Right Index to Target?," EERI Research Paper Series EERI_RP_2009_23, Economics and Econometrics Research Institute (EERI), Brussels.
  2. Simla Tokgoz, 2009. "Impact of Energy Markets on the EU Agricultural Sector, The," Center for Agricultural and Rural Development (CARD) Publications 09-wp485, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  3. Channing Arndt & Rui Benfica & Nelson Maximiano & Antonio M. D. Nucifora & James T. Thurlow, 2008. "Higher fuel and food prices: impacts and responses for Mozambique," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 497-511, November.
  4. Dermot J. Hayes & Bruce A. Babcock & Jacinto F. Fabiosa & Simla Tokgoz & Amani Elobeid & Tun-Hsiang (Edward) Yu & Fengxia Dong & Chad E. Hart & Ed Chavez & Suwen Pan & Miguel Carriquiry & Jerome Dumor, 2009. "Biofuels: Potential Production Capacity, Effects on Grain and Livestock Sectors, and Implications for Food Prices and Consumers," Center for Agricultural and Rural Development (CARD) Publications 09-wp487, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  5. de Crombrugghe, Denis & Palm, Franz C & Urbain, Jean-Pierre, 1997. "Statistical Demand Functions for Food in the USA and the Netherlands: Reply," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(5), pages 643-45, Sept.-Oct.
  6. K Balcombe & A Prakash, 2000. "Estimating the long-run supply and demand for agricultural labour in the UK," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 27(2), pages 153-166, June.
  7. Birur, Dileep & Hertel, Thomas & Tyner, Wally, 2008. "Impact of Biofuel Production on World Agricultural Markets: A Computable General Equilibrium Analysis," GTAP Working Papers 2413, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
  8. d’Artis Kancs & Norbert Wohlgemuth, 2007. "Evaluation of renewable energy policies in an integrated economic-energy-environment model," EERI Research Paper Series EERI_RP_2007_04, Economics and Econometrics Research Institute (EERI), Brussels.
  9. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
  10. Ramcharran, Harri, 2002. "Oil production responses to price changes: an empirical application of the competitive model to OPEC and non-OPEC countries," Energy Economics, Elsevier, vol. 24(2), pages 97-106, March.
  11. Gardner Bruce, 2007. "Fuel Ethanol Subsidies and Farm Price Support," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-22, December.
  12. Diks, Cees & Panchenko, Valentyn, 2006. "A new statistic and practical guidelines for nonparametric Granger causality testing," Journal of Economic Dynamics and Control, Elsevier, vol. 30(9-10), pages 1647-1669.
  13. Campiche, Jody L. & Bryant, Henry L. & Richardson, James W. & Outlaw, Joe L., 2007. "Examining the Evolving Correspondence Between Petroleum Prices and Agricultural Commodity Prices," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 9881, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  14. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  15. Julda Kielyte, 2008. "Estimating Panel Data Models in the Presence of Endogeneity and Selection," Journal of Economics and Econometrics, Economics and Econometrics Research Institute (EERI), Brussels, vol. 51(2), pages 1-19.
  16. Harry de Gorter & David R. Just, 2007. "The Welfare Economics of a Biofuel Tax Credit and the Interaction Effects with Price Contingent Farm Subsidies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(2), pages 477-488.
  17. Pavel Ciaian & Johan F.M. Swinnen, 2009. "Credit Market Imperfections and the Distribution of Policy Rents," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(4), pages 1124-1139.
  18. Saitone, Tina L. & Sexton, Richard J. & Sexton, Steven E., 2008. "Market Power in the Corn Sector: How Does It Affect the Impacts of the Ethanol Subsidy?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(2), August.
  19. Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
  20. Awad Abdel Hameed, Amna & Mohamed Arshad, Fatimah, 2008. "The Impact Of Petroleum Prices On Vegetable Oils Prices: Evidence From Cointegration Tests," Miscellaneous Papers 46251, Agecon Search.
  21. Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
  22. Thijssen, Geert, 1988. "Estimating a Labour Supply Function of Farm Households," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 15(1), pages 67-78.
  23. Krichene, Noureddine, 2002. "World crude oil and natural gas: a demand and supply model," Energy Economics, Elsevier, vol. 24(6), pages 557-576, November.
  24. de Crombrugghe, Denis & Palm, Franz C & Urbain, Jean-Pierre, 1997. "Statistical Demand Functions for Food in the USA and the Netherlands," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(5), pages 615-37, Sept.-Oct.
  25. Gohin, A. & Chantret, F., 2010. "The long-run impact of energy prices on world agricultural markets: The role of macro-economic linkages," Energy Policy, Elsevier, vol. 38(1), pages 333-339, January.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Serra, Teresa & Zilberman, David, 2013. "Biofuel-related price transmission literature: A review," Energy Economics, Elsevier, vol. 37(C), pages 141-151.
  2. Matteo Manera & Marcella Nicolini & Ilaria Vignati, 2012. "Returns in Commodities Futures Markets and Financial Speculation: A Multivariate GARCH Approach," Working Papers 2012.23, Fondazione Eni Enrico Mattei.
  3. Ladislav Kristoufek & Karel Janda & David Zilberman, 2012. "Regime-Dependent Topological Properties of Biofuels Networks," CAMA Working Papers 2012-49, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
  4. Kristoufek, Ladislav & Janda, Karel & Zilberman, David, 2012. "Correlations between biofuels and related commodities before and during the food crisis: A taxonomy perspective," Energy Economics, Elsevier, vol. 34(5), pages 1380-1391.
  5. Martha Negash & Jo Swinnen, 2012. "Biofuels and Food Security: Micro-evidence from Ethiopia," LICOS Discussion Papers 31912, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  6. Vacha, Lukas & Janda, Karel & Kristoufek, Ladislav & Zilberman, David, 2013. "Time–frequency dynamics of biofuel–fuel–food system," Energy Economics, Elsevier, vol. 40(C), pages 233-241.
  7. Ladislav Kristoufek & Karel Janda & David Zilberman, 2013. "Non-linear price transmission between biofuels, fuels and food commodities," Working Papers IES 2013/16, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2013.
  8. Chrz, Stepan & Hruby, Zdenek & Janda, Karel & Kristoufek, Ladislav, 2013. "Provazanost trhu potravin, biopaliv a fosilnich paliv
    [Interconnections within food, biofuel, and fossil fuel markets]
    ," MPRA Paper 43958, University Library of Munich, Germany.
  9. Ikram Jebabli & Mohamed Arouri & Frédéric Teulon, 2014. "On the effects of world stock market and oil price shocks on food prices: An empirical investigation based on TVPVAR models with stochastic volatility," Working Papers 2014-209, Department of Research, Ipag Business School.
  10. Papież, Monika, 2014. "A dynamic analysis of causality between prices of corn, crude oil and ethanol," MPRA Paper 56540, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:lic:licosd:29211. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.