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Weather Volatility and Production Efficiency

Denitsa Angelova and Jan Käbel
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Jan Käbel: School of Life Sciences Weihenstephan, Technical University of Munich, Alte Akademie 8, 85354 Freising, Germany

Sustainability, 2019, vol. 11, issue 24, 1-12

Abstract: We formulate a stochastic production frontier model to estimate the production efficiency scores while correcting for technical progress and weather effects in the form of temperature and precipitation levels and volatility. We econometrically estimate a model for European agriculture. Our results indicate that average temperature, unlike average precipitation levels, significantly influences aggregate agricultural output. We estimate that a marginal increase in temperature would decrease aggregate European agricultural output by about 1.6% percent. Further estimation results indicate a slight increase in output associated with marginal increases of precipitation and temperature volatilities.

Keywords: production efficiency; agriculture; weather (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2019
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