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The Relationship Between Fuel and Food Prices: Methods and Outcomes

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  • Karel Janda
  • Ladislav Krištoufek

Abstract

We review the fuel-food price linkage model—time-series, structural, and general or partial equilibrium models, with most attention devoted to the time-series literature. Our assessment is nested in both the discussion of general commodity prices comovement and the prediction of the most likely development of biofuel policies and production. We show that the introduction of significant biofuels policies around 2005 increased the price transmission between fossil fuels and food commodities, illustrating the intuitively expected leading role of fuel prices over food prices. Particular price linkages dynamically evolve over time, depending on the particular market under consideration. The econometric results show that owing to policy-induced trade barriers, there is no evidence of a sufficiently integrated international biofuels market with the US, European, and Brazilian markets and that biofuel policies in these countries follow separate paths.

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  • Karel Janda & Ladislav Krištoufek, 2019. "The Relationship Between Fuel and Food Prices: Methods and Outcomes," Annual Review of Resource Economics, Annual Reviews, vol. 11(1), pages 195-216, October.
    • Handle: RePEc:anr:reseco:v:11:y:2019:p:195-216
    DOI: 10.1146/annurev-resource-100518-094012
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    References listed on IDEAS

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    Cited by:

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    2. Mishra , Ashok & Valera , Harold Glenn & Yamano, Takashi & Pede, Valerien, 2024. "The Russian Invasion of Ukraine, Fertilizer Prices, and Food Security: Evidence from Rice-Producing Economies in Asia," ADB Economics Working Paper Series 724, Asian Development Bank.
    3. Sergio Adriani David & Claudio M. C. Inácio & José A. Tenreiro Machado, 2019. "Ethanol Prices and Agricultural Commodities: An Investigation of Their Relationship," Mathematics, MDPI, vol. 7(9), pages 1-25, August.
    4. Karel Janda & Ladislav Krištoufek & Barbora Schererová & David Zilberman, 2021. "Price transmission in biofuel-related global agricultural networks," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(10), pages 399-408.
    5. Bilgili, Faik & Koçak, Emrah & Kuşkaya, Sevda & Bulut, Ümit, 2020. "Estimation of the co-movements between biofuel production and food prices: A wavelet-based analysis," Energy, Elsevier, vol. 213(C).
    6. Linjie Wang & Jean‐Paul Chavas & Jian Li, 2024. "Dynamic linkages in agricultural and energy markets: A quantile impulse response approach," Agricultural Economics, International Association of Agricultural Economists, vol. 55(4), pages 639-676, July.
    7. Janda, Karel & Kravec, Peter, 2022. "VECM Modelling of the Price Dynamics for Fuels, Agricultural Commodities and Biofuels," EconStor Preprints 259404, ZBW - Leibniz Information Centre for Economics.
    8. Krzysztof Drachal, 2019. "Analysis of Agricultural Commodities Prices with New Bayesian Model Combination Schemes," Sustainability, MDPI, vol. 11(19), pages 1-23, September.
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