Mutual Responsiveness of Biofuels, Fuels and Food Prices

Kristoufek, L., K. Janda and D. Zilberman (2012). “Mutual Responsiveness of Biofuels, Fuels and Food Prices”, CAMA Working Paper 38/2012

35 Pages Posted: 17 Jul 2013

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: August 1, 2012

Abstract

We propose a new approach to analyze relationships and dependencies between price series. For the biofuels markets and the related commodities, we study their mutual responsiveness, which can be understood as price cross-elasticities. Several methodological caveats are uncovered and discussed. We find that both ethanol and biodiesel prices are responsive to their production factors as well as their substitute fossil fuels (ethanol with corn, sugarcane and the US gasoline; and biodiesel with soybeans and German diesel). Responsiveness of all significant pairs increased remarkably during the food crisis of 2007/2008. Causality tests further show that price changes in producing factors lead the changes in biofuels, yet for some price levels, the direction is reversed.

Keywords: Biofuels, Mutual responsiveness, Price cross-elasticity, Causality

JEL Classification: C22, Q16, Q42

Suggested Citation

Kristoufek, Ladislav and Janda, Karel and Zilberman, David, Mutual Responsiveness of Biofuels, Fuels and Food Prices (August 1, 2012). Kristoufek, L., K. Janda and D. Zilberman (2012). “Mutual Responsiveness of Biofuels, Fuels and Food Prices”, CAMA Working Paper 38/2012. Available at SSRN: https://ssrn.com/abstract=2294754 or http://dx.doi.org/10.2139/ssrn.2294754

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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