UC Davis Agricultural and Resource Economics

Professors Carter and Smith Win AAEA Outstanding AJAE Article Award

Aug. 27, 2018

UC Davis Department of Agricultural and Resource Economics (ARE) Distinguished Professor Colin Carter and ARE Professor and Vice Chair Aaron Smith were awarded the Agricultural & Applied Economics Association (AAEA) Outstanding American Journal of Agricultural Economics Award for "Commodity Storage and the Market Effects of Biofuel Policies," co-authored with Gordon Rausser, UC Berkeley ARE distinguished professor.

Abstract

Legislation passed in 2007 by the U.S. Congress increased by about 1.3 billion bushels the net amount of corn required to be processed annually into ethanol for motor-fuel use. We estimate that corn prices were about 30% higher from 2006 to 2014 than they would have been without this demand increase. We develop a partially identified structural vector autoregression model. Our identification strategy is unique in the literature because it enables us to estimate the effects of transitory shocks, such as weather, separately from the effects of persistent shocks, such as the increased ethanol mandate. Moreover, by only partially identifying our model, we show how to generate robust conclusions without strong identifying assumptions.

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