Biofuels and Food Prices: Searching for the Causal Link
AbstractWe analyze the relationship between the prices of ethanol, agricultural commodities and livestock in Nebraska, the U.S. second largest ethanol producer. The paper focuses on long-run relations and Granger causality linkages between ethanol and the other commodities. The analysis takes possible structural breaks into account and uses a set of techniques that allow to draw inferences about the existence of long-run relations and of short-run in-sample Granger causality and out-ofsample predictive ability. Even after taking breaks into account, evidence that the price of ethanol drives the price dynamics of the other commodities is extremely weak. It is concluded that, on the basis of a formal, comprehensive and rigorous causality analysis we do not find evidence in favour of the Food versus Fuel debate.
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Bibliographic InfoPaper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 239.
Date of creation: Mar 2013
Date of revision: Mar 2013
Ethanol; Field Crops; Granger Causality; Forecasting; Structural Breaks;
Other versions of this item:
- Marzio GALEOTTI & Andrea BASTIANIN & Matteo MANERA, 2013. "Biofuels and Food Prices: Searching for the Causal Link," Departmental Working Papers 2013-11, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
- Andrea Bastianin & Marzio Galeotti & Matteo Manera, 2013. "Biofuels and Food Prices: Searching for the Causal Link," Working Papers 2013.22, Fondazione Eni Enrico Mattei.
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- 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
- Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-03-16 (Agricultural Economics)
- NEP-ALL-2013-03-16 (All new papers)
- NEP-ENE-2013-03-16 (Energy Economics)
- NEP-FOR-2013-03-16 (Forecasting)
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- Bastianin, Andrea & Galeotti, Marzio & Manera, Matteo, 2014. "Causality and predictability in distribution: The ethanol–food price relation revisited," Energy Economics, Elsevier, vol. 42(C), pages 152-160.
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