IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

On the Distribution of Crop Yields: Does the Central Limit Theorem Apply?

  • Phoebe Koundouri

    (Dept. of International and European Economic Studies, Athens University of Economics and Business)

  • Nikolaos Kourogenis

    ()

    (Department of Banking and Financial Management, University of Piraeus.)

In this paper we take issue with the applicability of the central limit theorem (CLT) on aggregate crop yields. We argue that even after correcting for the effects of spatial dependence, systemic heterogeneities and risk factors, aggregation does not necessarily lead to normality. We show that aggregation is also likely to lead to nonnormal distributions, which exhibit both skewness and excess kurtosis. In particular, we consider the case in which the number of summands is not constant but varies with time, which corresponds to the empirically relevant situation where the number of acres used for cultivation of a particular crop exhibits substantial variation over time. In this case, the CLT is not applicable while the limit theorems for random sums of random variables, which apply, predict that the limiting distribution of the sum is not normal and depends on the postulated distribution of the number of summands. Using data from aggregate US states crop yields, we provide empirical support regarding the deviation of aggregate crops yields from normality.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://wpa.deos.aueb.gr/docs/CropYieldsBlinded.pdf
File Function: First version
Download Restriction: no

Paper provided by Athens University of Economics and Business in its series DEOS Working Papers with number 1007.

as
in new window

Length:
Date of creation:
Date of revision:
Handle: RePEc:aue:wpaper:1007
Contact details of provider: Postal: 76, Patission Street, Athens 104 34
Phone: (+301) 8214021
Fax: (301) 8214021
Web page: http://deos.aueb.gr/

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Zanini, Fabio C. & Sherrick, Bruce J. & Schnitkey, Gary D. & Irwin, Scott H., 2001. "Crop Insurance Valuation Under Alternative Yield Distributions," 2001 Conference, April 23-24, 2001, St. Louis, Missouri 18953, NCR-134 Conference on Applied Commodity Price Analysis, Forecasting, and Market Risk Management.
  2. Hennessy, David A., 2009. "Crop Yield Skewness and the Normal Distribution," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), April.
  3. Joseph Atwood & Saleem Shaik & Myles Watts, 2003. "Are Crop Yields Normally Distributed? A Reexamination," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 888-901.
  4. Alan P. Ker & Barry K. Goodwin, 2000. "Nonparametric Estimation of Crop Insurance Rates Revisited," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 463-478.
  5. Barry K. Goodwin & Alan P. Ker, 1998. "Nonparametric Estimation of Crop Yield Distributions: Implications for Rating Group-Risk Crop Insurance Contracts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 139-153.
  6. Clark, Peter K, 1973. "A Subordinated Stochastic Process Model with Finite Variance for Speculative Prices," Econometrica, Econometric Society, vol. 41(1), pages 135-55, January.
  7. Richard E. Just & Quinn Weninger, 1999. "Are Crop Yields Normally Distributed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 287-304.
  8. Blattberg, Robert C & Gonedes, Nicholas J, 1974. "A Comparison of the Stable and Student Distributions as Statistical Models for Stock Prices," The Journal of Business, University of Chicago Press, vol. 47(2), pages 244-80, April.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:aue:wpaper:1007. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekaterini Glynou)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.