Ethanol Production and Food Price: Simultaneous Estimation of Food Demand and Supply

We investigate the impact of U.S. and Brazilian ethanol production on global food prices. Our analysis is based on a food demand and food supply simultaneous equation model. We control for the increased demand for food by developing countries, the de- preciation of the U.S. dollar, energy prices, and technological advancement in agricul- tural production. Based on our three-stage least squares results, the rapid expansion of ethanol production is unlikely to have been related to the high food prices experienced in the late 2000s. However, we find that world food prices are significantly impacted by energy prices