Dynamic bioethanol price pass-through:implication for food security
Résumé
This paper analyzes the pass-through dynamics of world bioethanol price shocks to
food prices, particularly maize prices, for a set of developing and developed countries,
over the period 2000-2014. Using local projections, a method robust to the risk of misspecification
that allows us to generate multi-step predictions, we estimate the dynamic
responses at each period of interest. Our results show that there is a positive response
of maize prices to bioethanol price shocks. On the whole sample, the impulse response
function displays that a one percent increase in bioethanol prices per liter contributes to
around 50 percent rise in maize price two years after the shock. Besides, on average, the
asymmetry concerning the magnitude of shocks indicates that high magnitude shocks
impact is more important than low magnitude shocks; however, asymmetry with respect
to shocks direction reveals a nil net effect, suggesting that bioethanol is not harmful to
food security. Finally, the intensity of these impacts is subject to heterogeneity related
to many factors: income level, trade openness, exchange rate regime, maize production,
net maize trade, or the role of public policies.