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Abstract
Multivariate local linear regression and parametric error correction models are applied to assess price linkages and price
transmission patterns between food and energy prices in Spain. Weekly biodiesel, sunflower and crude oil prices
observed from November 2006 to October 2010 are used in the empirical analysis. Results suggest the existence of a
long-run equilibrium relationship between the three prices studied. Biodiesel is the only variable that adjusts to deviations
from this long-run parity. Local linear regression techniques show that the speed of adjustment of biodiesel prices is
higher when biodiesel is cheap than when it is expensive. Energy prices are also found to influence sunflower oil prices
through the short-run price dynamics.