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Globalization and taste convergence: The cases of wine and beer

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  • Aizenman, Joshua
  • Brooks, Eileen

Abstract

This paper investigates changes in cultural consumption patterns for a low-concentration industry: wine and beer. Using data on 38 countries from 1963-2000, there is clear convergence in the consumption of wine relative to beer between 1963 and 2000. Convergence occurs even more quickly within groups of countries that have a higher degree of integration. A key prediction of international trade is confirmed in the data: greater trade integration weakens the association between production and consumption patterns -- although the relative consumption of wine can be explained well in 1963 by grape production and latitude, these variables are much less significant in 2000. Despite these “scientific†explanations for the consumption of wine, there is also a cultural angle to wine consumption. While the relative wine consumption of France and Germany is converging, several Latin American countries fail to converge. The patterns of convergence are consistent with dynamics of adjustment in an overlapping generation habit formation model.

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Bibliographic Info

Paper provided by Department of Economics, UC Santa Cruz in its series Santa Cruz Department of Economics, Working Paper Series with number qt8bk1w5r9.

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Date of creation: 01 Mar 2005
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Handle: RePEc:cdl:ucscec:qt8bk1w5r9

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Keywords: convergence; globalization; trade and taste convergence; habit formation;

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References

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  1. Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1797-1855, December.
  2. Pollak, Robert A, 1970. "Habit Formation and Dynamic Demand Functions," Journal of Political Economy, University of Chicago Press, vol. 78(4), pages 745-63, Part I Ju.
  3. Azzeddine Azzam & Rigoberto Lopez & Elena Lopez, 2004. "Imperfect Competition and Total Factor Productivity Growth," Journal of Productivity Analysis, Springer, vol. 22(3), pages 173-184, November.
  4. Jody Overland & Christopher D. Carroll & David N. Weil, 2000. "Saving and Growth with Habit Formation," American Economic Review, American Economic Association, vol. 90(3), pages 341-355, June.
  5. Constantinides, George M, 1990. "Habit Formation: A Resolution of the Equity Premium Puzzle," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 519-43, June.
  6. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-59, December.
  7. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
  8. Azzam, Azzeddine M. & Lopez, Elena & Lopez, Rigoberto A., 2002. "Imperfect Competition and Total Factor Productivity Growth in U.S. Food Processing," Research Reports 25147, University of Connecticut, Food Marketing Policy Center.
  9. Steven M. Suranovic & Robert Winthrop, 2005. "Cultural Effects of Trade Liberalization," International Trade 0511003, EconWPA.
  10. Eckhard Janeba, 2004. "International Trade and Cultural Identity," NBER Working Papers 10426, National Bureau of Economic Research, Inc.
  11. Francois, Patrick & van Ypersele, Tanguy, 2002. "On the protection of cultural goods," Journal of International Economics, Elsevier, vol. 56(2), pages 359-369, March.
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Cited by:
  1. Johan F.M. Swinnen & Liesbeth Colen, 2011. "Beer Drinking Nations: The Determinants of Global Beer Consumption," Working Papers id:4324, eSocialSciences.

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