The Relationship Between Fuel and Food Prices: Methods and Outcomes

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 deve...

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Bibliographic Details
Published inAnnual review of resource economics Vol. 11; no. 1; pp. 195 - 216
Main Authors Janda, Karel, Krištoufek, Ladislav
Format Journal Article
LanguageEnglish
Published Palo Alto Annual Reviews 01.01.2019
Annual Reviews, Inc
Subjects
biodiesel
Biodiesel fuels
Biofuels
Commodity prices
Economic models
ethanol
Food
Food prices
Fuel oil prices
fuels
JEL Q16
JEL Q42
JEL Q56
oil
Prices
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Summary: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.
ISSN:1941-1340
1941-1359
DOI:10.1146/annurev-resource-100518-094012