Biofuels and Food Prices: Searching for the Causal Link

36 Pages Posted: 4 Apr 2013

See all articles by Andrea Bastianin

Andrea Bastianin

University of Milan; Fondazione Eni Enrico Mattei

Marzio Galeotti

University of Milan - Department of Environmental Science and Policy (ESP); Fondazione Eni Enrico Mattei (FEEM); GREEN - Centre for Research on Geography, Resources, Environment, Energy & Networks

Matteo Manera

University of Milan-Bicocca, Italy - Department of Economics, Management and Statistics (DEMS); Fondazione Eni Enrico Mattei (FEEM), Milan, Italy

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Date Written: April 2, 2013

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-of-sample 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

JEL Classification: C22, C53, Q13, Q42, Q47

Suggested Citation

Bastianin, Andrea and Galeotti, Marzio and Manera, Matteo, Biofuels and Food Prices: Searching for the Causal Link (April 2, 2013). FEEM Working Paper No. 22.2013, Available at SSRN: https://ssrn.com/abstract=2243412 or http://dx.doi.org/10.2139/ssrn.2243412

Andrea Bastianin

University of Milan ( email )

Via Conservatorio, 7
Milan, 20122
Italy

HOME PAGE: http://https://www.unimi.it/it/ugov/person/andrea-bastianin

Fondazione Eni Enrico Mattei ( email )

C.so Magenta 63
Milano, 20123
Italy

Marzio Galeotti (Contact Author)

University of Milan - Department of Environmental Science and Policy (ESP) ( email )

2 via Celoria
Milano, 20133
Italy
+39-2-50316470 (Phone)
+39-2-50316486 (Fax)

HOME PAGE: http://www.unimi.it/chiedove/cv/ENG/marzio_galeotti.pdf?1531977155891

Fondazione Eni Enrico Mattei (FEEM) ( email )

Corso Magenta 63
Milan, 20123
Italy

HOME PAGE: http://www.feem.it

GREEN - Centre for Research on Geography, Resources, Environment, Energy & Networks ( email )

via Rontgen
Milan, 20123
Italy

HOME PAGE: http://https://www.green.unibocconi.eu

Matteo Manera

University of Milan-Bicocca, Italy - Department of Economics, Management and Statistics (DEMS) ( email )

Via Bicocca degli Arcimboldi, 8
Milan, 20126
Italy
+39 02 6448 5819 (Phone)
+39 02 6448 5878 (Fax)

HOME PAGE: http://www.matteomanera.it

Fondazione Eni Enrico Mattei (FEEM), Milan, Italy ( email )

Corso Magenta, 63
Milan, 20123
Italy
+39 02 520 36944 (Phone)

HOME PAGE: http://www.feem.it

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