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


  • Wang, Sun Ling
  • McPhail, Lihong Lu


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.

Suggested Citation

  • Wang, Sun Ling & McPhail, Lihong Lu, 2012. "Impacts of Energy Shocks on US Agricultural Productivity Growth and Food Prices —A Structural VAR Analysis," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124892, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea12:124892

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    References listed on IDEAS

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    Cited by:

    1. Ball, V. Eldon & Färe, R. & Grosskopf, S. & Margaritis, D., 2014. "The role of energy productivity in the U.S. agriculture," UC3M Working papers. Economics we1424, Universidad Carlos III de Madrid. Departamento de Economía.
    2. Xian, Hui & Colson, Gregory & Karali, Berna & Wetzstein, Michael, 2017. "Do nonrenewable-energy prices affect renewable-energy volatility? The case of wood pellets," Journal of Forest Economics, Elsevier, vol. 28(C), pages 42-48.
    3. Mat Rahim, Siti Rohaya, 2014. "Asymmetric Cointegration: Barley and Crude Oil Price in United States," MPRA Paper 58447, University Library of Munich, Germany.
    4. Ball, V.E. & Färe, R. & Grosskopf, S. & Margaritis, D., 2015. "The role of energy productivity in U.S. agriculture," Energy Economics, Elsevier, vol. 49(C), pages 460-471.

    More about this item


    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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