The objective of this paper is to evaluate the whole of shocks in supply and in demand on recent developments in sugar cane production. Unit root tests were performed following DF-GLS (Elliot et al. 1992) methodology and co-integration tests, used Johansen's (1988). The model was estimated as a structural Vector Error Correction, with innovations calculated through the Bernanke-Sims decomposition. Supply shocks had a permanent impact over cane production, but demand shocks had a transitory effect over it. Innovations coming from the supply side were the most important in explaining the fluctuations in the sugar cane production in Brazil.
Sugar and ethanol sector; Sugar cane; Time series
