Abstract
Over the last decades, the European wine industry has been object of increased international competition, which has implications for the dynamics of wine production. This paper examines the underlying factors of wine production in the European Union (EU) from a macroeconomic perspective. We apply an expanded Cobb-Douglas production function, which includes monetary indicators. A dynamic panel data GMM approach along with pooled OLS and fixed effect model for the period from 1999-2014 are applied to estimate the model. We find a positive impact from labour, capital and wine export and a negative impact from interest rate to wine production; however, no robust and significant impact is observed from wine import as well as from inflation and exchange rates. Our results indicate that EU wine production is influenced by monetary policy, which could be a useful instrument for policy makers promoting wine production in this region.
Highlights
During the recent decades, the wine industry has been the object of profound changes in its production, and its patterns of consumption and of international trade
We evaluated the impact of several macroeconomic factors on European Union (EU) wine production, with particular emphasis on monetary indicators
Based on the theoretical background, we have developed an extended Cobb-Douglas production function that was estimated by applying the dynamic panel generalised method of moments (GMM) approach to annual data from 1999 to 2014
Summary
The wine industry has been the object of profound changes in its production, and its patterns of consumption and of international trade. New wine-producing countries have emerged as major players in the international markets, with strategies that offer products in line with changing consumer behaviours and habits (Castillo et al, 2016; Anderson et al, 2017). Among the EU producers, France, Italy and Spain are the largest wine-producing countries, and in 2014, together with Germany, Portugal, Greece, Hungary and Austria, they were responsible for almost 96% and 57% of the EU’s and of total global wine production, respectively. These eight countries accounted for 94% of the NEW MEDIT N. These eight countries accounted for 94% of the NEW MEDIT N. 3/2019 wine exported by the EU and 65% of the total wine exports around the world
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