How market efficiency and the theory of storage link corn and ethanol markets
2010
Mallory, Mindy L. | Hayes, Dermot J. | Irwin, Scott H.
In this article we use the theories of market efficiency and supply of storage to develop a conceptual link between the corn and ethanol markets and explore statistical evidence for the link. We propose that a long-run no-profit condition is established in distant futures markets for ethanol, corn, and natural gas and then use the theory of storage to define an inter-temporal equilibrium among these prices. The relationship shows that under certain conditions, future price expectations will influence current spot prices and that a short-term relationship between input and output prices will exist. This short-term relationship will contain fixed costs. We demonstrate validity of the theory using a structural price model and then by means of time-series techniques.
Mostrar más [+] Menos [-]Palabras clave de AGROVOC
Información bibliográfica
Este registro bibliográfico ha sido proporcionado por National Agricultural Library