Estimation of the Co-movements Between Biofuel Production and Food Prices: A Wavelet-based Analysis

Abstract

Recently, the significance of biofuel production on food prices has become an important topic of discussion within the framework of sustainable development. Based on the relevant discussions, this work aims at observing the influence of biofuel production on food prices in the US for the monthly period 1981-2018 by considering all possible structural changes between the co-movements of the variables. In the analyses, oil prices and population variables are also employed as control variables. To this end, we use continuous wavelet model estimations for the whole sample period and sub-sample periods at different frequencies. All computations have considered the potential changes in co-movements of the variables at different sub-sample periods corresponding to high and low frequencies of observed time series data. Estimation results show that there exist significant relationships between biofuel production and food prices in the short-term and long-term cycles. The outcomes of the research hence may provide some insights into the design of sustainable energy and food policies in the United States. (C) 2020 Elsevier Ltd. All rights reserved.