Economics at your fingertips  

Considering macroeconomic indicators in the food before fuel nexus

Cheng Qiu, Gregory Colson, Cesar Escalante () and Michael Wetzstein

Energy Economics, 2012, vol. 34, issue 6, 2021-2028

Abstract: A structural vector autoregression (SVAR) model along with a direct acyclic graph is employed to decompose how supply/demand structural shocks affect food and fuel markets. The results support the hypothesis that fundamental market forces of demand and supply are the main drivers of food price volatility. Increased biofuel production may cause short-run food price increases but not long-run price shifts. Decentralized freely operating markets will mitigate the persistence of any price shocks and restore prices to their long-run trends. The main policy implications are that oil, gasoline, and ethanol market shocks do not spillover into grain prices, which indicates no long-run food before fuel issue. In the short-run, grain prices can spike due to market shocks, so programs designed to blunt these price spikes may be warranted.

Keywords: Biofuel; Corn; DAG; Ethanol (search for similar items in EconPapers)
JEL-codes: C32 Q18 Q31 Q41 Q42 Q48 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Considering Macroeconomic Indicators in the Food versus Fuel Issues (2011) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-04-20
Handle: RePEc:eee:eneeco:v:34:y:2012:i:6:p:2021-2028