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          Volume 42, Number 03, August 2010 >

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Title: The Impact of the Oil Sector on Commodity Prices: Correlation or Causation?
Authors: Saghaian, Sayed H.
Keywords: ethanol prices
crude oil prices
corn prices
soybean prices
wheat prices
causal structure
JEL Codes: Q11
Issue Date: 2010-08
Abstract: The interconnections of agriculture and energy markets have increased through the rise in the new biofuel agribusinesses and the oil–ethanol–corn linkages. The question is whether these linkages have a causal structure by which oil prices affect commodity prices and through these links, instability is transferred from energy markets to already volatile agricultural markets. In this article, we present empirical results using contemporary time-series analysis and Granger causality supplemented by a directed graph theory modeling approach to identify the links and plausible contemporaneous causal structures among energy and commodity variables. The results show that although there is a strong correlation among oil and commodity prices, the evidence for a causal link from oil to commodity prices is mixed.
Institution/Association: Journal of Agricultural and Applied Economics>Volume 42, Number 03, August 2010
Total Pages: 9
From Page: 477
To Page: 485
Collections:Volume 42, Number 03, August 2010

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