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Variation and links among food and energy international prices. An analysis through VAR models from 2000 to 2012

Author

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  • Leucci, A. C.
  • Ghinoi, S.
  • Sgargi, D.
  • Wesz, V. J., Jr.

Abstract

An adequate understanding of the dynamics that characterize the agri-food market is fundamental for the development of really efficient economic policies, especially after the two recent hikes in the prices of food commodities. The econometric literature provides today advanced analysis tools such as VAR models: these models are based on a system of equations in which each variable is regressed on a set of deterministic variables, on a number of l delays related to each covariate in the model. To test the effectiveness of this analytical tool at dealing with the issues related to agrifood economy we applied a VAR analysis on prices of major food and energy commodities (oil and biodiesel) referred to the period January 2005-December 2012. Our results identified statistically significant intertemporal relationships between the price of corn, soybeans, rapeseed and oil, and suggested the direction of these relationships; we could conclude that the price of corn and soybeans are generated in the energy market only. Moreover, we used as variables the share of commodities used for the production of biofuels, and we could observe that important alterations on the food market are due to the convenience in producing ethanol and biodiesel, since the portion of the crops used for energy is in direct competition with that devoted to the feeding. This kind of models, therefore, deal adequately with datas and issues of the agri-food system and provide an analytical basis to develop economic policies that take into account the complexity of the global food system.

Suggested Citation

  • Leucci, A. C. & Ghinoi, S. & Sgargi, D. & Wesz, V. J., Jr., 2013. "Variation and links among food and energy international prices. An analysis through VAR models from 2000 to 2012," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149923, Italian Association of Agricultural and Applied Economics (AIEAA).
  • Handle: RePEc:ags:aiea13:149923
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    References listed on IDEAS

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    1. Gal Hochman & Scott Kaplan & Deepak Rajagopal & David Zilberman, 2012. "Biofuel and Food-Commodity Prices," Agriculture, MDPI, Open Access Journal, vol. 2(3), pages 1-10, September.
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    3. David Zilberman & Gal Hochman & Deepak Rajagopal & Steve Sexton & Govinda Timilsina, 2013. "The Impact of Biofuels on Commodity Food Prices: Assessment of Findings," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 95(2), pages 275-281.
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    6. Park, Hwanil & Fortenbery, T. Randall, 2007. "The Effect of Ethanol Production on the U.S. National Corn Price," 2007 Conference, April 16-17, 2007, Chicago, Illinois 37565, NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
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    Cited by:

    1. Rosa, Franco & Vasciaveo, Michela & Weaver, Robert D., 2014. "Agricultural and oil commodities: price transmission and market integration between US and Italy," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 2, August.

    More about this item

    Keywords

    alternative energy source; biofuels; var; Demand and Price Analysis; International Development; C32; Q16; Q42;

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • 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

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