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Long‐run and Short‐run Co‐movements in Energy Prices and the Prices of Agricultural Feedstocks for Biofuel
Author(s) -
Myers Robert J.,
Johnson Stanley R.,
Helmar Michael,
Baumes Harry
Publication year - 2014
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aau003
Subject(s) - biofuel , raw material , economics , agriculture , food prices , agricultural economics , short run , production (economics) , natural resource economics , monetary economics , macroeconomics , food security , chemistry , waste management , engineering , ecology , organic chemistry , biology
Recent expansions in biofuel production have led to concerns about an emerging “new relationship” between energy prices and the prices of agricultural feedstock for biofuel. We provide new econometric evidence on this relationship using common trend‐common cycle decompositions to estimate long‐run and short‐run co‐movement across various energy and agricultural prices. We also test for the presence of regime changes that may alter the relationship between energy and agricultural feedstock prices under certain conditions. We find that co‐movements between energy and agricultural feedstock prices tend to dissipate in the long‐run, which has important implications for biofuel and food policy.