Cointegration: implications for the market efficiencies of the high fructose corn syrup and refined sugar markets
نویسنده
چکیده
US domestic sugar prices have been maintained substantially above world prices engendering sugar substitutes (notably high fructose corn syrup, HFCS) to be sold at a discount to sugar Ð a discount of 10 Ð 30% (Greer, 1991; USDA, 1990). Sugar substitutes have been successful in capturing as much as 42% of the US caloric sweetener market by 1984 (Leu, Schmitz and Knutson, 1987). This paper investigates the dynamic relationship between re® ned sugar price and HFCS prices. Cointegration econometrics is utilized to investigate possible linkages between these markets. The remainder of the paper is divided into four sections. First, an outline of US sugar policy is provided. Section III presents a very brief summary of the cointegration methods applied in the paper. Then, results from application of cointegration techniques to monthly re® ned sugar and HFCS prices are presented. Finally, Section V discusses the implications of the results in a context that is germane to policy and market e ciency issues.
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