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Growth of the Brazilian biofuel sector: an inter-temporal general equilibrium analysis

Author

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  • Vinyes, Cristina
  • Roe, Terry

Abstract

In order to enhance energy security and independence, Brazil has supported the production and use of ethanol. Brazilís leadership in this market reveals complex inter-linkages between ethanol, sugarcane, sugar and fossil fuels. These sectors have been growing an average of 14% per year, while the countryís growth rates have been very modest. This paper presents a theoretical framework for understanding the interaction between Brazilís economic growth and the evolution of these sectors as the economy transitions toward long-run equilibrium. Then, the sensitivity of these results is analyzed under two simulations; Örst, a reduction of the cost of Önancial intermediation (which the literature identiÖes as one of the factors a§ecting Brazilís growth), and second, an increase in ethanol prices by 2.6%, based on the expectation that biofuelsíworld demand is increasing.

Suggested Citation

  • Vinyes, Cristina & Roe, Terry, 2012. "Growth of the Brazilian biofuel sector: an inter-temporal general equilibrium analysis," Conference papers 332230, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332230
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    File URL: https://ageconsearch.umn.edu/record/332230/files/5926.pdf
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    References listed on IDEAS

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