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Correlations between biofuels and related commodities before and during the food crisis: A taxonomy perspective

  • Kristoufek, Ladislav
  • Janda, Karel
  • Zilberman, David

In this paper, we analyze the relationships between the prices of biodiesel, ethanol and related fuels and agricultural commodities with a use of minimal spanning trees and hierarchical trees. To distinguish between short-term and medium-term effects, we construct these trees for different frequencies (weekly and monthly). We find that in short-term, both ethanol and biodiesel are very weakly connected with the other commodities. In medium-term, the biofuels network becomes more structured. The system splits into two well separated branches — a fuels part and a food part. Biodiesel tends to the fuels branch and ethanol to the food branch. When the periods before and after the food crisis of 2007/2008 are compared, the connections are much stronger for the post-crisis period. This is the first application of this methodology on the biofuel systems.

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Article provided by Elsevier in its journal Energy Economics.

Volume (Year): 34 (2012)
Issue (Month): 5 ()
Pages: 1380-1391

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Handle: RePEc:eee:eneeco:v:34:y:2012:i:5:p:1380-1391
Contact details of provider: Web page: http://www.elsevier.com/locate/eneco

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