Miss Essay

19599 Words Dec 26th, 2015 79 Pages
The Food Crises: A quantitative model of food prices including speculators and ethanol conversion
Marco Lagi, Yavni Bar-Yam, Karla Z. Bertrand and Yaneer Bar-Yam
New England Complex Systems Institute
238 Main St. Suite 319 Cambridge MA 02142, USA reviewed by:
C. Peter Timmer - Cabot Professor of Development Studies emeritus. Harvard University
Jeffrey C. Fuhrer - Executive Vice President and Senior Policy Advisor. Federal Reserve Bank of Boston
Richard N. Cooper - Maurits C. Boas Professor of International Economics. Harvard University
Thomas C. Schelling - Distinguished Professor of Economics emeritus. University of Maryland

(Dated: September 21, 2011)

Abstract
Recent increases in basic food prices are severely impacting
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Rapid action is needed to reduce the impacts of the price increases on global hunger.

1

I.

FOOD PRICES: OVERVIEW

In 2007 and early 2008 the prices of grain, including wheat, corn and rice, rose by over
100%, then fell back to prior levels by late 2008. A similar rapid increase occurred again in the fall of 2010. These dramatic price changes [1] have resulted in severe impacts on vulnerable populations worldwide and prompted analyses of their causes [2–65]. Among the causes discussed are (a) weather, particularly droughts in Australia, (b) increasing demand for meat in the developing world, especially in China and India, (c) biofuels, especially corn ethanol in the US and biodiesel in Europe, (d) speculation by investors seeking financial gain on the commodities markets, (e) currency exchange rates, and (f) linkage between oil and food prices. Many conceptual characterizations and qualitative discussions of the causes suggest that multiple factors are important. However, quantitative analysis is necessary to determine which factors are actually important and which are not. While various efforts have been made, no analysis thus far has provided a direct description of the price dynamics.
Here we provide a quantitative model of price dynamics demonstrating that only two factors are central: speculators and corn ethanol. We introduce and

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