Impacts of Ethanol Policy on Corn Prices: A Meta-Analysis
|Author:||Mgr. Přemysl Horáček|
|Year:||2017 - summer|
|Leaders:|| prof. PhDr. Tomáš Havránek Ph.D.
|Work type:|| Finance, Financial Markets and Banking
|Awards and prizes:|
|Abstract:||Deflecting a significant portion of corn production to ethanol for fuelling purposes increases
the prices of corn. Although many studies examined the relationship between biofuels and
agricultural commodity prices in the last decade, their estimates vary broadly (from nil to
85%). Without knowing the precise estimates of these impacts, policymakers can hardly set
the biofuel policies optimally. I conduct a meta-analysis of over 150 estimates of the effect of
corn ethanol production on corn prices to bring more clarity to the issue. Furthermore, I detect
substantial selective reporting bias in the literature. After controlling for this bias with the use
of various methods including the mixedeffects multilevel model, the results show that the true
effect of a one billion gallon expansion in corn ethanol on corn prices is about 2-3%, which is
less than commonly thought.