The emergence of biofuels and the co-movement between crude oil and agricultural prices

Francisco Peñaranda () and Augusto Rupérez-Micola ()
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Francisco Peñaranda: http://www.econ.upf.edu/en/people/onefaculty.php?id=p3433
Augusto Rupérez-Micola: http://www.econ.upf.edu/en/people/onefaculty.php?id=p3759

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: Biofuels are becoming an alternative to non-renewable energy sources but we know little about the economic mechanisms influencing their prices. This paper studies the interrelationships between the spot prices of oil and those of agricultural commodities used as biofuel feedstocks. Using daily data since 1988, we identify a co-movement after 2005 that does not appear for other food-related commodities and is not due to general economic variables. We also find traces of the co-movement in the prices of a large biofuel stock. The results amount to the first systematic piece of empirical evidence linking spot oil and agricultural markets via the emergence of biofuels.

Keywords: Biofuels; co-movement; ethanol; oil; structural breaks; threshold regressions (search for similar items in EconPapers)
JEL-codes: G15 Q18 O13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-ene
Date: 2009-10
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Persistent link: http://EconPapers.repec.org/RePEc:upf:upfgen:1174

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