An empirical analysis of the interrelations among the export of red wine from France, Italy and Spain

This paper deals with an empirical analysis of international trade data from EUROSTAT where the export of red wine from France, Italy and Spain - to Belgium, Denmark, Japan, The Netherlands, UK and USA - is investigated. Using monthly data from 1993:1 to 1998:12, trade flows, measured in quantities of red wine, from France, Italy and Spain to the before-mentioned countries are compared. The wine trade flows are modelled in a VAR (vector autoregression) framework in order to perform tests of causality. From obvious reasons red wines from the Southern European countries are expected to be close substitutes - at least concerning the receiving countries - which is tested, including price effects and political incidents as the French nuclear testings at Muroroa in 1995. The analysis reveals that, generally, the French wine exports not influenced by Italian or Spanish wines, whereas wine export from Italy seems more sensitive towards the competitors at the export markets. Concerning a negative influence on French wine export from the nuclear testing this seems to have been the case for Denmark, Japan and (probably) the UK.