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Beer in Good Times and Bad: A U.S. State-Level Analysis of Economic Conditions and Alcohol Consumption

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  • Freeman, Donald G.

Abstract

Data on U.S. state-level beer shipments from 1970 to 2007 provided by The Beer Institute are used to estimate pooled time-series models of annual consumption regressed on economic and demographic variables, using the common correlated effects (CCE) estimators to control for unobserved common effects and to allow for heterogeneous responses across units. Beer is found to be a procyclical good, varying negatively with the state unemployment rate. Previous findings for the negative effect of excise taxes on consumption are supported, though the estimated elasticities are smaller than those reported in earlier research. Demographics have a significant and material effect on consumption, with larger shares of young adults in the population implying greater consumption of beer per capita. (JEL Classification: D12, C23)

Suggested Citation

  • Freeman, Donald G., 2011. "Beer in Good Times and Bad: A U.S. State-Level Analysis of Economic Conditions and Alcohol Consumption," Journal of Wine Economics, Cambridge University Press, vol. 6(2), pages 231-251, October.
  • Handle: RePEc:cup:jwecon:v:6:y:2011:i:02:p:231-251_00
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    Cited by:

    1. Freeman, Donald G., 2012. "Is Beer Safer than Spirits? How the Change in Consumption Shares of Alcoholic Beverage Types Affects Traffic Mortality in Young People," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(04), pages 1-11, November.
    2. Freeman, Donald G., 2012. "Is Beer Safer than Spirits? How the Change in Consumption Shares of Alcoholic Beverage Types Affects Traffic Mortality in Young People," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(4).

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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