Impact of Ethanol Mandates on Corn Prices in the U.S., Canada, and Mexico

Sharmistha Self and Suhina Deol
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Suhina Deol: University of Arizona

Journal of Economic Insight, 2016, vol. 42, issue 2, 23-41

Abstract: The objective of this paper is to investigate the impact of U.S. and Canadian ethanol mandates on corn prices in the U.S., Canada, and Mexico. Ethanol mandates were enacted to create viable alternate energy sources to oil and reduce greenhouse gas emissions. Since the majority of ethanol production comes from corn, it has led to corn being diverted from a food and feed source to an energy source. While food diversion causes relatively little concern for Canada and US, the rising corn prices have produced social unrest in Mexico where corn is a staple food and spending on food forms a large part of consumption spending. Our results indicate that both the US and Canadian ethanol mandates resulted in an increase in corn prices in the U.S. as well as in Mexico.

JEL-codes: F13 Q02 Q17 Q18 Q38 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:mve:journl:v:42:y:2016:i:2:p:23-41

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