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Dynamic almost ideal demand systems: an empirical analysis of alcohol expenditure in Ireland

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  • John Eakins
  • Liam Gallagher

Abstract

This paper presents a dynamic form of the Almost Ideal Demand System (AIDS). Three versions of the static AIDS model are employed to determine the preferred long-run equilibrium model and represents the short-run dynamics by an error correction mechanism. This estimation procedure is then applied to alcohol expenditure in Ireland. The estimated point elasticities are consistent with previous studies and a priori expectations. Beer and spirits are found to be price inelastic in both the short and long run. While wine is price inelastic in the short run and price elastic in the long run.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 35 (2003)
Issue (Month): 9 ()
Pages: 1025-1036

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Handle: RePEc:taf:applec:v:35:y:2003:i:9:p:1025-1036

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References

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  1. Johnson, James A, et al, 1992. "Short-Run and Long-Run Elasticities for Canadian Consumption of Alcoholic Beverages: An Error-Correction Mechanism/Cointegration Approach," The Review of Economics and Statistics, MIT Press, vol. 74(1), pages 64-74, February.
  2. Andreas Andrikopoulos & James Brox & Emanuel Carvalho, 1997. "The demand for domestic and imported alcoholic beverages in Ontario, Canada: a dynamic simultaneous equation approach," Applied Economics, Taylor & Francis Journals, vol. 29(7), pages 945-953.
  3. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  4. Jones, Andrew M, 1989. "A Systems Approach to the Demand for Alcohol and Tobacco," Bulletin of Economic Research, Wiley Blackwell, vol. 41(2), pages 85-105, April.
  5. David Blake & Angelika Nied, 1997. "The demand for alcohol in the United Kingdom," Applied Economics, Taylor & Francis Journals, vol. 29(12), pages 1655-1672.
  6. Deaton, Angus S & Muellbauer, John, 1980. "An Almost Ideal Demand System," American Economic Review, American Economic Association, vol. 70(3), pages 312-26, June.
  7. Hendry, David F. & Pagan, Adrian R. & Sargan, J.Denis, 1984. "Dynamic specification," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 18, pages 1023-1100 Elsevier.
  8. Dickey, David A & Fuller, Wayne A, 1981. "Likelihood Ratio Statistics for Autoregressive Time Series with a Unit Root," Econometrica, Econometric Society, vol. 49(4), pages 1057-72, June.
  9. repec:ubc:bricol:92-12 is not listed on IDEAS
  10. Conniffe, Denis & McCoy, Daniel, 1993. "Alcohol Use in Ireland: Some Economic and Social Implications," Research Series, Economic and Social Research Institute (ESRI), number GRS160.
  11. Clements, Kenneth W & Selvanathan, Antony & Selvanathan, Saroja, 1996. "Applied Demand Analysis: A Survey," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 63-81, March.
  12. Clements, Kenneth W & Johnson, Lester W, 1983. "The Demand for Beer, Wine, and Spirits: A Systemwide Analysis," The Journal of Business, University of Chicago Press, vol. 56(3), pages 273-304, July.
  13. Karagiannis, G. & Katranidis, S. & Velentzas, K., 2000. "An error correction almost ideal demand system for meat in Greece," Agricultural Economics, Blackwell, vol. 22(1), pages 29-35, January.
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Citations

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Cited by:
  1. Paul Dunne & Beverly Edkins, 2005. "The demand for Food in South Africa," Working Papers 0509, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
  2. Sean Lyons & Karen Mayor & Richard S.J. Tol, 2007. "Convergence Of Consumption Patterns During Macroeconomic Transition: A Model Of Demand In Ireland And The Oecd," Working Papers FNU-141, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2007.
  3. Davis, Timothy R. & Ahmadi-Esfahani, Fredoun Z. & Iranzo, Susana, . "Demand under product differentiation: an empirical analysis of the US wine market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society.
  4. West, Sara E. & Parry, Ian W.H., 2009. "Alcohol-Leisure Complementarity: Empirical Estimates and Implications for Tax Policy," National Tax Journal, National Tax Association, vol. 62(4), pages 611-33, December.
  5. Motallebi, Marzieh & Pendell, Dustin L., 2013. "Estimating an Almost Ideal Demand System Model for Meats in Iran," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150188, Agricultural and Applied Economics Association.
  6. Rangkakulnuwat, Poomthan & Wang, H. Holly & Ahn, Sung K., 2007. "The inverse imported factor demand system in Thailand: A cointegration analysis," Economics Letters, Elsevier, vol. 94(3), pages 402-407, March.
  7. Wang, Xiaojin & Reed, Michael, 2013. "Estimation of Import Demand for Fishery Products in the U.S. Using the Source-Differentiated AIDS Model," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150207, Agricultural and Applied Economics Association.
  8. Gannon, Brenda & Layte, Richard & McGregor, Pat & Madden, David & Nolan, Anne & O'Neill, Ciaran & Smith, Samantha, 2007. "The Provision and Use of Health Services, Health Inequalities and Health and Social Gain," Research Series, Economic and Social Research Institute (ESRI), number BMI196 edited by Nolan, Brian.
  9. David Madden, 2007. "Health Interventions and Risky Behaviour," Working Papers 200709, School Of Economics, University College Dublin.

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