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Impacts of energy shocks on US agricultural productivity growth and commodity prices—A structural VAR analysis

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  • Wang, Sun Ling
  • McPhail, Lihong

Abstract

We examine the impacts of energy price shocks on U.S. agricultural productivity growth and commodity prices' volatility by developing a structural VAR model. We use historical annual data of real U.S. gasoline prices, agricultural total factor productivity (TFP), real GDP, real agricultural exports, and real agricultural commodity price from 1948 to 2011 to estimate the model. Our results indicate that an energy price shock has a negative impact on productivity growth in the short run (1year). An energy price shock and an agricultural productivity shock each account for about 10% of U.S. agricultural commodity price volatility with the productivity shock's contribution slightly higher. However, the impact from energy prices outweighs the contribution of agricultural productivity in the medium term (3years). With more persistent impacts, energy shocks contribute to most (about 15%) of commodity price's variation in the long run.

Suggested Citation

  • Wang, Sun Ling & McPhail, Lihong, 2014. "Impacts of energy shocks on US agricultural productivity growth and commodity prices—A structural VAR analysis," Energy Economics, Elsevier, vol. 46(C), pages 435-444.
    • Handle: RePEc:eee:eneeco:v:46:y:2014:i:c:p:435-444
    DOI: 10.1016/j.eneco.2014.05.006
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    More about this item

    Keywords

    U.S. agricultural productivity growth; Total factor productivity (TFP); Energy shocks; Agricultural commodity prices; Structural VAR analysis;
    All these keywords.

    JEL classification:

    • Q1 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • C3 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables
    • G2 - Financial Economics - - Financial Institutions and Services
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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