NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Publications by Jayson Beckman

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March 2011Commodity Price Volatility in the Biofuel Era: An Examination of the Linkage between Energy and Agricultural Markets
with Thomas W. Hertel
in The Intended and Unintended Effects of U.S. Agricultural and Biotechnology Policies, Joshua S. Graff Zivin and Jeffrey M. Perloff, editors
February 2011Commodity Price Volatility in the Biofuel Era: An Examination of the Linkage Between Energy and Agricultural Markets
with Thomas W. Hertel: w16824
Agricultural and energy commodity prices have traditionally exhibited relatively low correlation. However, recent increases in biofuel production have altered the agriculture-energy relationship in a fundamental way. This increase has drawn on corn previously sold to other uses, as well as acreage devoted to other crops. The US RFS envisions a further boost of ethanol production to 15 billion gallons per year, which might be expected to further strengthen the linkages. We estimate that, in the presence of a binding RFS, the inherent volatility in the US coarse grains market will rise by about one-quarter. And the volatility of the US coarse grains price to supply side shocks in that market will rise by nearly one-half. Under a high oil price scenario, rather than the RFS binding, the b...

Contact and additional information for this authorAll papers and publicationsWorking Papers onlyWorking Papers with publication info

 
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