Dynamic bioethanol price pass-through:implication for food security

Résumé 0

This paper analyzes the pass-through dynamics of world bioethanol price shocks tofood 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 misspecificationthat allows us to generate multi-step predictions, we estimate the dynamicresponses at each period of interest. Our results show that there is a positive responseof maize prices to bioethanol price shocks. On the whole sample, the impulse responsefunction displays that a one percent increase in bioethanol prices per liter contributes toaround 50 percent rise in maize price two years after the shock. Besides, on average, theasymmetry concerning the magnitude of shocks indicates that high magnitude shocksimpact is more important than low magnitude shocks; however, asymmetry with respectto shocks direction reveals a nil net effect, suggesting that bioethanol is not harmful tofood security. Finally, the intensity of these impacts is subject to heterogeneity relatedto many factors: income level, trade openness, exchange rate regime, maize production,net maize trade, or the role of public policies.