ly in view of calls to introduce regional or global interventions, including virtual reserves (Von Braun and Torero 2009), emergency reserves (Sarris 2010), or other insurance mechanisms (Mendoza 2009).

In contrast, the crude oil price elasticity increased across all five food commodities (figure 2, panel b), consistent with the view that the role of energy has strengthened after 2004. Notwithstanding this result, the literature on the post-2004 relationship between energy and non-energy prices is rather mixed. Serra (2011) found a long run linkage between ethanol and sugarcane prices in Brazil and also that crude oil and sugarcane prices lead ethanol prices but not vice versa. Saghaian (2010) found strong correlation among oil and other commodity prices (including food) but the evidence for a causal link from oil to other commodities was mixed. Gilbert (2010), based on quarterly data and Granger causality tests found correlation between the oil price and food prices both in terms of levels and changes, but also noted that it is the result of common causation and not of a direct causal link. Zhang and others (2010) found no direct long-run relationship between fuel and agricultural commodity prices and only a limited shortrun relationship. Reboredo (2012), using weekly data from 1998 to 2012, concluded that the prices of maize, wheat, and soybeans are not driven by oil price fluctuations. Baffes (2010) in an update to earlier work, found that the link between energy and non-energy prices increases across all commodity groups when the post-2006 observations are added into the model, a result which is consistent with the view that common factors have played a prominent role during the recent boom (Gilbert 2010), as they did during the early 1970s price increases (Cooper and Lawrence 1975). Baffes (2010) also found that the transmission elasticity increase is more pronounced in non-food than food commodities, a result which is in accord with the weaker link identified by some other authors.

To the extent that production of biofuels is driven by mandates, the mixed evidence on the link between energy and food prices should not be surprising.<sup>**13**</sup> To see this, consider an exogenous shock which pushes crude oil prices up, in turn, lowering fuel consumption. Under a mandated ethanol/gasoline mixture ethanol and maize prices will decline, _ceteris paribus_ , leading to a negative relationship between food and oil prices (de Gorter and Just 2009). From a statistical perspective, the mixed evidence on the energy/non-energy price linkage during the recent boom may reflect the frequency of the data used in various models. Indeed, Zilberman and others (2012) noted that higher frequency (and hence “noisier”) data are typically associated with weaker price relationships. The key conclusion from the studies based on time series analysis— especially the ones that include the recent boom period—is that the strength of the energy/food price relationship should not be used as a metric associated with the impact

> **13** If biofuels are profitable, in which case food commodities become another source of energy, food and oil prices will be moving in a synchronous manner. For the conditions under which biofuels become profitable see Gilbert (2010) and Schmidhuber (2007).

— 13 —