The linkage between the U.S. ethanol market and developing countries' maize prices: a panel SVAR analysis. (20th June 2017)

• Record Type: Journal Article
• Authors: Hao, Na; Pedroni, Peter; Colson, Gregory; Wetzstein, Michael
• Is Part Of: Agricultural economics. Volume 48:Number 5(2017)
• Page Start: 629
• Page End: 638
• Publication Date: 2017-06-20
• Subjects: Q17 -- Q18 -- Q43 -- Ethanol -- Food security -- Maize -- Panel structural vector autoregression -- World hunger; Agriculture -- Economic aspects -- Periodicals; 338.105
• DOI: 10.1111/agec.12362
• Languages: English
• ISSNs: 0169-5150

Abstract

Abstract: The major expansion of U.S. ethanol production raises concerns about the potential detrimental impacts on developing countries' agricultural prices, farm income, and food security. To assess the sensitivity of maize prices to ethanol production, this study explores the linkage between the U.S. ethanol market and developing countries' maize prices. The econometric approach, based on a panel structural vector autoregression model, captures market interdependencies and the likelihood that developing countries' responses are both heterogeneous and dynamic. The results indicate that the U.S. ethanol market's impacts on maize prices in developing countries are heterogeneous and that coastal countries are more susceptible to U.S. economic shocks. The estimates also suggest that countries more dependent on food imports and/or receiving U.S. food aid are at a higher risk of being affected by such shocks. Overall, the results indicate that those countries with the greatest sensitivity and exposure to global agricultural commodity markets could benefit from domestic policies and international assistance, which reduce their exposure to impacts from the U.S. maize market.