Food for the Stomach or Fuel for the Tank: What do Prices Tell Us?

The “food vs. fuel” debate has been difficult to resolve without letting the data speak. In this paper we investigate the short run interactions and the long-run equilibrium relationship between food and fuel prices. Results from cointegration analysis indicate a long-run equilibrium relationships between these prices. A closer examination of the price dynamics between ethanol and three food prices revealed that the corn-soybean linkage plays a key role in the fuel-food long-run relationship. Our results indicate that ethanol prices Granger cause corn prices, while no individual agricultural commodity appears to Granger cause ethanol prices. However, corn and soybean as a single group had a significant impact on the ethanol market.

Issue Date:
May 28 2014
Publication Type:
Conference Paper/ Presentation
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Food vs. Fuel, Cointegration analysis, VECM, agricultural prices, fuel prices

 Record created 2017-04-01, last modified 2020-10-28

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