Considering Macroeconomic Indicators in the Food versus Fuel Issues

In this study, a Structural Vector Autoregression model (SVAR) is employed to decompose how supply/demand structural shocks affect food and fuel prices within fuel and corn markets. Results indicate that the relative importance of each structural shock in explaining the variation of corn prices is different. Our findings support the hypothesis that corn prices increase as a response to those positive demand shocks in the short run, while in the long run, global competitive agricultural commodities markets as well as positive supply shocks respond to commodity price shocks, restoring prices to its long-run trends. In conclusion, fundamental market forces of demand and supply as well as real economic aggregated demand shocks were the main contributors of the 2007-2008 food price spike.


Keywords:
Issue Date:
2011
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/103689
Total Pages:
33
Series Statement:
Selected Paper
13075




 Record created 2017-04-01, last modified 2017-08-22

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