Assessing the impact of US ethanol on fossil fuel markets: A structural VAR approach

Energy Economics

Volumn 33, Issue 6, 2011, Pages 1177-1185

  McPhail, Lihong Lu ^a  

^a ECONOMIC RESEARCH SERVICE   (United States)

Author keywords

Crude oil, gasoline, and ethanol; Demand or supply shocks; Structural Vector Auto Regression (VAR)

Indexed keywords

CRUDE OIL MARKET; CRUDE OIL PRICES; DEMAND AND SUPPLY; DEMAND OR SUPPLY SHOCKS; DEMAND SHOCKS; DYNAMIC EFFECTS; FEEDSTOCK PRICES; FUEL MARKETS; GLOBAL OIL MARKET; OIL PRICES; POLICY DRIVEN; SIGNIFICANT IMPACTS; STRUCTURAL VECTOR AUTO REGRESSION (VAR); SUPPLY EXPANSION; TAX CREDITS; VECTOR AUTO REGRESSION MODELS;

BIOFUELS; BLENDING; COMMERCE; COSTS; CRUDE OIL; ETHANOL; GASOLINE; TAXATION; VALUE ENGINEERING;

ENERGY POLICY;

BIOFUEL; COMMODITY PRICE; CRUDE OIL; ENERGY MARKET; ENERGY POLICY; ETHANOL; FOSSIL FUEL; NUMERICAL MODEL; VECTOR AUTOREGRESSION;

UNITED STATES;

EID: 80755138376     PISSN: 01409883     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.eneco.2011.04.012     Document Type: Article

References (34)

1. Balcombe K., Rapsomanikis G. Bayesian estimation of non-linear vector error correction models: the case of the sugar-ethanol-oil nexus in Brazil. American Journal of Agricultural Economics 2008, 90(3):658-668.
2. Barsky R.B., Killian L. Do we really know that oil caused the great stagflation? A monetary alternative. NBER Chapters. NBER Macroeconomics Annual 2001 2002, volume 16:137-198. National Bureau of Economic Research, Inc.
3. Barsky R.B., Killian L. Oil and the macroeconomy since the 1970s. Journal of Economic Perspectives 2004, volume 18(4):115-134.
4. Bernanke B.S. Alternative explanations of the money-income correlation. Carnegie-Rochester Conf. Ser. Public Policy 1986, 25:49-100.
5. Blanchard O.J., Watson M.W. Are business cycles all alike?. The American Business Cycle: Continuity and Change 1986, 123-156. University of Chicago Press, Chicago, IL. R.J. Gordon (Ed.).
6. Campiche J.L., Bryant H.L., Richardson J.W., Outlaw J.L. Examining the evolving correspondence between petroleum prices and agricultural commodity prices. Selected Paper prepared for presentation at the American Agricultural Economics Association Annual Meeting, Portland, OR, July 29-August 1, 2007 2007.
7. Cha K.S., Bae J.H. Dynamic impacts of high oil prices on the bioethanol and feedstock markets. Energy Policy 2011, 39(2):753-760.
8. Chen S.S., Chen H.C. Oil prices and real exchange rates. Energy Economics 2007, 29(3):390-404.
9. Coudert V., Mignon V., Penot A. Oil price and the dollar. Energy Studies Review 2007, 15(2):48-65.
10. de Gorter H., Just D.R. The economics of a blend mandate for biofuels. American Journal of Agricultural Economics 2009, 91(3):738-750.
11. Du X., Hayes D.J. The impact of ethanol production on US and regional gasoline markets. Energy Policy 2009, 37:3227-3234.
12. Enders W. Wiley series in probability and mathematical statistics. Applied Econometric Time Series 2004, Wiley, New York.
13. Gehlhar Mark, Winston Ashley, Somwaru Agapi Effects of Increased Biofuels on the U.S. Economy in 2022, Economic Research Report, ERR-102. Economic Research Service, U.S. Department of Agriculture, October, 29 2010.
14. Frank J., Garcia P. How strong are the linkages among agricultural, oil, and exchange rate markets. Proceedings of the NCCC-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management, St. Louis, MO 2010.
15. Hamilton J.D. Understanding crude oil prices. Energy Journal 2009, 30(2):179-206.
16. Hamilton J.D. Causes and Consequences of the Oil Shock of 2007-08 2009, Brookings Papers on Economic Activity.
17. Harri A., Nalley L., Hudson D. The relationship between oil, exchange rates, and commodity prices. Journal of Agricultural and Applied Economics 2009, 41(2):501-510.
18. Hochman G., Rajagopal D., Zilberman D. The effect of biofuel on the international oil market. Selected Paper prepared for presentation at the Agricultural & Applied Economics Associations 2010 Annual Meeting, Denver, Colorado 2010.
19. Lapan H., Moschini G. Biofuel policies and welfare: is the stick of mandates better than the carrot of subsidies?. Iowa State University Department of Economics Working Paper No. 09010 2009.
20. Lütkepohl H., Reimers H.E. Impulse response analysis of cointegrated systems. Journal of Economic Dynamics and Control 1992, 16:53-78.
21. McPhail L.L., Babcock B.A. Short-run price and welfare impacts of federal ethanol policies. Center for Agricultural and Rural Development Publications 08-wp468 2008.
22. Killian L. Explaining Fluctuations in gasoline prices: a joint model of the global crude oil market and the US retail gasoline market. Energy Journal 2010, 31(2):105-130.
23. Killian L. Not all oil price shocks are alike: disentangling demand and supply shocks in the crude oil market. American Economic Review 2009, 99:1053-1069.
24. Rajagopal D., Sexton S.E., Roland-Holst D., Zilberman D. Challenge of biofuel: filling the tank without emptying the stomach. Environmental Research Letters 2007, Dec.
25. Runkle D.E. Vector autoregressions and reality. Journal of Business and Economic Statistics 1987, 437-442.
26. Saghaian S.H. The impact of the oil sector on commodity prices: correlation or causation?. Journal of Agricultural and Applied Economics 2010, 41(3):477-485.
27. Sexton S.E., Rajagopal D., Zilberman D., Hochma G. Food Versus Fuel: How Biofuels Make Food More Costly and Gasoline Cheaper. Agricultural and Resource Economics Update http://www.agecon.ucdavis.edu/extension/update/articles/v12n1_1.pdf.
28. Sims C.A. Are forecasting models usable for policy analysis?. Federal Reserve Bank of Minneapolis Quarterly Review 1986, 2-16.
29. Sims C.A., Stock J.H., Watson M.W. Inference in linear time series with some unit roots. Econometrica 1990, 58:113-144.
30. Timilsina G.R., Shrestha A. Biofuels markets, targets and impacts. The World Bank Policy Research Working Paper 2010, 5364.
31. Thompson W., Meyer S., Westhoff P. Model of the US Ethanol Market, FAPRI-MU report series 37971. Food and Agricultural Policy Research Institute at University of Missouri 2008.
32. Zhang Z., Vedenov D., Wetzstein M. Can the U.S. ethanol industry compete in the alternative fuels market?. Agricultural Economics 2007, 37:105-112.
33. Zhang Z., Lohr L., Escalante C., Wetzstein M. Ethanol, corn, and soybean price relations in a volatile vehicle-fuels market. Energies 2009, 2(2):320-339.
34. Zhang Z., Lohr L., Escalante C., Wetzstein M. Food versus fuel: what do prices tell us. Energy Policy 2010, Volume 38(1):445-451.