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ENSO and Soybean Prices: Correlation without Causality

Published online by Cambridge University Press:  12 June 2017

David Letson  and
B.D. McCullough
David Letson
Affiliation:
Rosenstiel School of Marine and Atmospheric Science, University of Miami
B.D. McCullough
Affiliation:
Department of Decision Sciences, Drexel University, Philadelphia, PA
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Abstract

In this paper we seek to characterize the robustness of the ENSO/soybean price relationship and to determine whether it has practical economic content. If such a meaningful relationship exists, the implications could be profound for commodity traders and for public sector investments in climate forecasting capabilities. Also, the validity of economic evaluations of climate impacts and climate forecasts based on ENSO-price independence would come into question. Our findings suggest a relationship between interannual climate and soybean prices, although we are not able to attribute the relationship to ENSO or to say that ENSO is economically important.

Keywords

climate forecastingGranger causalityspectral analysisSOISSTC22Q11
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 33 , Issue 3 , December 2001 , pp. 513 - 521
Copyright
Copyright © Southern Agricultural Economics Association 2001

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