Mutual Responsiveness of Biofuels, Fuels and Food Prices

Ladislav Krištoufek (), Karel Janda and David Zilberman

CAMA Working Papers from Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University

Abstract: We propose a new approach to analyze relationships and dependencies between price series. For the biofuels markets and the related commodities, we study their mutual responsiveness, which can be understood as price cross-elasticities. Several methodological caveats are uncovered and discussed. We find that both ethanol and biodiesel prices are responsive to their production factors as well as their substitute fossil fuels (ethanol with corn, sugarcane and the US gasoline; and biodiesel with soybeans and German diesel). Responsiveness of all significant pairs increased remarkably during the food crisis of 2007/2008. Causality tests further show that price changes in producing factors lead the changes in biofuels, yet for some price levels, the direction is reversed.

Keywords: Biofuels; Mutual responsiveness; Price cross-elasticity; Causality (search for similar items in EconPapers)
JEL-codes: C22 Q16 Q42 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2012-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:een:camaaa:2012-38

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