Title: Interdependencies in the Energy-Bioenergy-Food Price Systems: A Cointegration Analysis
Citation: RESOURCE AND ENERGY ECONOMICS vol. 33 no. 1 p. 326–348
Publication Year: 2011
JRC N°: JRC60899
ISSN: 0928-7655
URI: http://www.sciencedirect.com/science/article/pii/S092876551000059X
DOI: 10.1016/j.reseneeco.2010.07.004
Type: Articles in periodicals and books
Abstract: The present paper studies the interdependencies between the energy, bioenergy and food prices. We develop a vertically integrated multi-input, multi-output market model with two channels of price transmission: a direct biofuel channel and an indirect input channel. We test the theoretical hypothesis by applying time-series analytical mechanisms to nine major traded agricultural commodity prices, including corn, wheat, rice, sugar, soybeans, cotton, banana, sorghum and tea, along with one weighted average world crude oil price. The data consists of 783 weekly observations extending from January 1994 to December 2008. The empirical findings confirm the theoretical hypothesis that the prices for crude oil and agricultural commodities are interdependent including also commodities not directly used in bioenergy production: an increase in oil price by 1$/barrel increases the agricultural commodity prices between 0.10 $/tonne and 1.80 $/ tonne. Contrary to the theoretical predictions, the indirect input channel of price transmission is found to be small and statistically insignificant.
JRC Directorate:Growth and Innovation

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