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Abstract

The purpose of this paper is to analyse the effect that weather variables have on the mean and variance of the yields of barley, oats, potatoes and wheat in Scotland, during the period 1935- 2012. Although theoretically grounded on the stochastic production function approach, the paper uses the generalised autoregressive conditional heteroskedastic (GARCH) to model the variance of the crop yields. Results indicate that temperature has a positive effect on the mean yield, whilst rainfall has a negative effect on it. In addition, both temperature and rainfall have differentiated results on the crop yields’ variances.

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