Interdependencies in the Energy-Bioenergy-Food Price Systems: A Cointegration Analysis

Pavel Ciaian and d'Artis Kancs

EERI Research Paper Series from Economics and Econometrics Research Institute (EERI), Brussels

Abstract: The present paper examines a long-run relationship between the energy, bioenergy and food prices. In the recent years the bioenergy production has increased significantly around the world. The increase has been driven by rising energy prices as well as by environmental policies aiming at reducing the harmful effects of conventional sources of energy, such as climate change. Bioenergy, in turn, affects agricultural markets, because it uses agricultural commodities as inputs. The theoretical model we develop predicts that, because of price inelastic food demand, the agricultural price increase may be substantial. The empirical findings confirm the theoretical hypothesis that energy prices do affect prices of agricultural commodities. However, the co-integration is weaker than theoretically predicted. The price effect of bioenergy might be mitigated by new technological development, which improve yields and lead to an offsetting effect in the supply of agricultural commodities, and by fallow land brought into cultivation, when agricultural profitability is rising.

Keywords: Energy; bioenergy; crude oil; prices; cointegration. (search for similar items in EconPapers)
JEL-codes: Q11 Q13 Q42 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2009-06-06
New Economics Papers: this item is included in nep-agr, nep-ene and nep-env
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Citations: View citations in EconPapers (30)

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http://www.eeri.eu/documents/wp/EERI_RP_2009_06.pdf (application/pdf)

Related works:
Journal Article: Interdependencies in the energy-bioenergy-food price systems: A cointegration analysis (2011)
Working Paper: Interdependencies in the Energy-Bioenergy-Food Price Systems: A Cointegration Analysis (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eei:rpaper:eeri_rp_2009_06

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