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Biofuels and Food Prices: Searching for the Causal Link

Andrea Bastianin (), Marzio Galeotti () and Matteo Manera ()

No 55, IEFE Working Papers from IEFE, Center for Research on Energy and Environmental Economics and Policy, Universita' Bocconi, Milano, Italy

Abstract: We analyze the relationship between the prices of ethanol, agricultural commodities and livestock in Nebraska, the U.S. second largest ethanol producer. The paper focuses on long-run relations and Granger causality linkages between ethanol and the other commodities. The analysis takes possible structural breaks into account and uses a set of techniques that allow to draw inferences about the existence of long-run relations and of short-run in-sample Granger causality and out-ofsample predictive ability. Even after taking breaks into account, evidence that the price of ethanol drives the price dynamics of the other commodities is extremely weak. It is concluded that, on the basis of a formal, comprehensive and rigorous causality analysis we do not find evidence in favour of the Food versus Fuel debate.

Keywords: Ethanol; Field Crops; Granger Causality; Forecasting; Structural Breaks (search for similar items in EconPapers)
JEL-codes: C22 C53 Q13 Q42 Q47 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-agr and nep-ene
Date: 2013
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Related works:
Journal Article: Ethanol and field crops: Is there a price connection? (2016) Downloads
Working Paper: Biofuels and Food Prices: Searching for the Causal Link (2013) Downloads
Working Paper: Biofuels and Food Prices: Searching for the Causal Link (2013) Downloads
Working Paper: Biofuels and Food Prices: Searching for the Causal Link (2013) Downloads
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