Measuring the impact of temperature changes on the wine production in the Douro Region using the short time fourier transform

This paper investigates the cyclical behaviour of the wine production in Douro region during the period 1932-2008. In general, wine production is characterised by large fluctuations which are composed of short-term and/or long-term cycles. The aim of this paper is twofold: firstly, we decompose the wine production's variance in order to find the dominating production cycles, i.e we try to explain whether wine production follows more long-term or short-term cycles. In the next step, we try to explain those cycles using a dependent variable, namely the medium spring temperature (Tm_Sp) for the period 1967-2008. We estimated a Time-Varying Autoregressive Model, which could explain 75% of the production that is characterised by 4.8- and 2.5-year cycles. We use the Short Time Fourier Transform to decompose the link between wine production and temperature. When the temperature was incorporated, the R (2) increased and the Akaike criterion value was lower. Hence, Tm_Sp causes a large amount of these cycles and the wine production variation reflects this relationship. In addition to an upward trend, there is a clearly identifiable cycle around the long-term trend in production. We also show how much of the production cycle and what cycle in particular is explained by the Tm_Sp. There is a stable but not constant link between production and the Tm_Sp. In particular, the temperature is responsible for 5.2- and 2.4-year cycles which has been happening since the 1980s. The Tm_Sp can also be used as an indicator for the 4.8- and 2.5-year cycles of production. The developed model suggests that stationarity is a questionable assumption, and this means that historical distributions of wine production are going to need dynamic updating.