How Biofuels Policies Boosted Grain Staple Prices: A Counterfactual Analysis

We empirically address the implications of biofuel policy regarding major grains, to the subsequent evolution of the markets for calories from the three major grains, maize, wheat and rice. The implied market variables, namely, market price, consumption, and stocks, using a structurally estimated model combined with data on current and projected demand shifts, replicate the levels and dynamics of actual market behaviors, including the price rise before and during the 2007-2008 world food price crisis and the price dip at the breakout of the latest financial crisis. Counterfactual market variables constructed by removing mandates and their effects on production suggest that the biofuel mandate is the main driving force of the increase in price levels.


Issue Date:
2014
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/170709
Series Statement:
Paper
5125




 Record created 2017-04-01, last modified 2017-08-27

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