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Energies 2016, 9(6), 464; doi:10.3390/en9060464

Interdependencies between Biofuel, Fuel and Food Prices: The Case of the Brazilian Ethanol Market

1
Department of Agricultural, Food and Environmental Sciences (D3A), Università Politecnica delle Marche, Via Brecce Bianche, Ancona 60131, Italy
2
Departamento de Economia Administração e Sociologia, Escola Superior de Agricultura Luiz de Queiroz, Universidade de São Paulo, Av. Pádua Dias 11, Piracicaba, São Paulo 13400-970, Brazil
These investigations and many of the results have been presented at the 29th International Conference of Agricultural Economics (ICAE) held in Milan, Italy, 8–14 August 2015.
*
Author to whom correspondence should be addressed.
Academic Editor: Talal Yusaf
Received: 14 April 2016 / Revised: 1 June 2016 / Accepted: 7 June 2016 / Published: 17 June 2016
(This article belongs to the Special Issue Agriculture and Energy)
View Full-Text   |   Download PDF [1275 KB, uploaded 17 June 2016]   |  

Abstract

Brazil is currently the world’s largest sugar producer and exporter, as well as the world’s largest producer and consumer of sugarcane ethanol as a transportation fuel. The growth of this market originates from a combination of government policies and technological change, in both the sugarcane ethanol processing sector and the manufacture of flex-fuel vehicles. In recent years however, ethanol production has been questioned due to its possible impact on food prices. The present paper aims to explore the impact of Brazilian ethanol prices on sugar and gasoline prices. The relationships between a times series of these prices are investigated using a Vector Error Correction Model (VECM), supported by Granger Causality tests. In addition, Impulse Response Functions (IRFs) and Forecast Error Variance Decompositions (FEVD) are computed in order to investigate the dynamic interrelationships within these series. Our results suggest that ethanol prices are affected by both food and fuel prices, but that there is no strong evidence that changes in ethanol prices have an impact on food prices. View Full-Text
Keywords: ethanol; sugar; gasoline; prices; Vector Error Correction Model (VECM); granger causality ethanol; sugar; gasoline; prices; Vector Error Correction Model (VECM); granger causality
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Bentivoglio, D.; Finco, A.; Bacchi, M.R.P. Interdependencies between Biofuel, Fuel and Food Prices: The Case of the Brazilian Ethanol Market. Energies 2016, 9, 464.

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