Are ethanol markets globalized or regionalized?

Abstract : This study investigates whether the US and Brazilian ethanol markets are globalized or regionalized (i.e., whether they are interdependent or independent) using weekly frequency data from July 2006 to December 2017. The empirical results indicate that the US ethanol market is unlinked to the Brazilian one in the short-run, however in the long-run they are globalized (interdependent) and co-influence each other. Asymmetric effects are identified between both ethanol markets and the Brazilian ethanol market Granger causes the US ethanol market. The findings help us understand the asymmetric dependence of the US ethanol market.