An article of our colleagues Karel Janda and Ladislav Kristoufek, The relationship between fuel and food prices: Methods, outcomes, and lessons for commodity price risk management, was published in the Annual Review of Resource Economics, which publishes publishes reviews of resource economics covering such topics as agricultural economics, environmental economics, renewable resources, and exhaustible resources.
We critically assess the fuel-food price linkage models both of the structural and of the time series nature with the main attention devoted to the econometric time series literature. We document shifting focus from a relatively straightforward vector autoregressive and error-correction econometric analysis of fuel-food commodity price level co-movement towards inclusion of biodiesel and ethanol prices directly into analysis, towards consideration of both price levels and price volatilities, and towards growing sophistication of econometric methodologies and integration of econometric analysis of price co-movement with theoretical concepts and considerations. The key insight of biofuels price transmission literature is that the price transmission is time and market specific, dynamically evolving with the development of biofuels policies and associated technologies. If one wants to generalize the empirical results of the vast topical literature, the most prominent causal relationships are uncovered coming from crude oil to agricultural commodities and then towards biofuels. The latter, in addition to be mostly influenced by their producing factors, are also usually driven by their complementary fossil fuels. Even though there are also numerous studies not finding any strong connection between biofuels and their feedstock, the literature finding biofuels driving the prices of agricultural commodities up is negligible.
Autor - Mgr. Ema C. Stašová