A study of the volatility of the sheep meat production in European Union (EU)

European Union is an important world player in sheep meat production and trade. Studying the volatility of the sheep meat production in each individual country is meaningful given the existing conditions imposed by CAP. The study of this volatility was based on the concept of entropy, a useful tool in the economic analysis. Furthermore, this study involves a comparative analysis between the entropy and the standard deviation. Both measures are used in order to study the volatility of the sheep meat production in the European Union. Great values of volatility are confirmed in South and Transition Economies, while lower are validated for the North and Central - North European countries. Testing the differences in the volatility between the individual countries no convergence was validated. Thus, despite the implementation of the Common Agricultural Policy (CAP) no convergence in the production rate between the state - members has been achieved. Therefore, the empirical survey of this volatility is an interesting issue. Trying to model the sheep meat production we used ARIMA modelling. In particular, for every country an ARMA or ARIMA model was estimated in order to present the sheep meat production while there have been forecasts for the time period 2001-2006. Indeed, ARMA and ARIMA models have performed well for the data used, a result based on the criteria of the Root Mean Squared Error (RMSE) and the Mean Absolute Percentage Error (MAPE).