Correlations between Biofuels and Related Commodities: A Taxonomy Perspective

42 Pages Posted: 13 Jun 2012

See all articles by Ladislav Kristoufek

Ladislav Kristoufek

Charles University

Karel Janda

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

David Zilberman

University of California, Berkeley - Department of Agricultural & Resource Economics

Date Written: June 1, 2012

Abstract

In this paper, we analyze the relationships between the prices of biodiesel, ethanol and related fuels and agricultural commodities with a use of minimal spanning trees and hierarchical trees. We find that in short-term, both ethanol and biodiesel are very weakly connected with the other commodities. In medium-term, the biofuels network becomes more structured. The system splits into two well separated branches - a fuels part and a food part. Biodiesel tends to the fuels branch and ethanol to the food branch. When the periods before and after the food crisis of 2007/2008 are compared, the connections are much stronger for the post-crisis period. This is the first application of this methodology on the biofuels systems.

Keywords: biofuels, networks, minimal spanning tree, hierarchical tree

JEL Classification: C38, Q16, Q42

Suggested Citation

Kristoufek, Ladislav and Janda, Karel and Zilberman, David, Correlations between Biofuels and Related Commodities: A Taxonomy Perspective (June 1, 2012). Available at SSRN: https://ssrn.com/abstract=2083435 or http://dx.doi.org/10.2139/ssrn.2083435

Ladislav Kristoufek

Charles University ( email )

Celetná 13
Praha 1, 116 36
Czech Republic

Karel Janda (Contact Author)

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic
+422 240 05 223 (Phone)
+422 242 11 374 (Fax)

HOME PAGE: http://www.cerge-ei.cz

David Zilberman

University of California, Berkeley - Department of Agricultural & Resource Economics ( email )

Berkeley, CA 94720
United States

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