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Role of Crude Oil in Determining the Price of Corn in the United States: A Non-parametric Approach

Author

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  • Subrata K. Mitra

    (Institute of Management Technology)

  • Debdatta Pal

    (Indian Institute of Management Lucknow)

Abstract

This paper explores the role of crude oil in determining corn prices for data on the weekly front future prices in the United States. With 38% of corn production allocated toward fuel ethanol, a possible effect of crude oil price variation on corn price fluctuations is theoretically indicated. To test this theory, two complementary approaches—a parametric multiple regression and a non-parametric multivariate adaptive regression splines approach are employed. Along with indicating a weak relationship between corn and crude oil prices, the results suggest that corn price responds nonlinearly to the changes in soybean and wheat prices.

Suggested Citation

  • Subrata K. Mitra & Debdatta Pal, 2024. "Role of Crude Oil in Determining the Price of Corn in the United States: A Non-parametric Approach," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 22(2), pages 395-420, June.
    • Handle: RePEc:spr:jqecon:v:22:y:2024:i:2:d:10.1007_s40953-024-00382-1
    DOI: 10.1007/s40953-024-00382-1
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    More about this item

    Keywords

    Nonlinear price transmission; Crude oil price; Agricultural prices; MARS; JEL classification: C22; Q41; Q16;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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