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Gradual switching regression estimates of alcohol demand elasticities

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  • Craig Gallet

Abstract

Given that alcohol remains a heavily taxed good, studies of the demand for alcohol are numerous in the literature. This paper uses annual data from 1964-92 to estimate key elasticities of the US demand for distilled spirits. Unlike previous studies, which typically assume elasticities are constant over time, we allow elasticities to vary over time by estimating a gradual switching regression model. The results indicate that the demand for distilled spirits today differs substantially from the 1960s, suggesting that the efficacy of proposed policies is dependent on knowledge of this change in demand.

Suggested Citation

  • Craig Gallet, 1999. "Gradual switching regression estimates of alcohol demand elasticities," Applied Economics Letters, Taylor & Francis Journals, vol. 6(6), pages 377-379.
  • Handle: RePEc:taf:apeclt:v:6:y:1999:i:6:p:377-379
    DOI: 10.1080/135048599353122
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    References listed on IDEAS

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    1. M. A. Salisu & V. N. Balasubramanyam, 1997. "Income and price elasticities of demand for alcoholic drinks," Applied Economics Letters, Taylor & Francis Journals, vol. 4(4), pages 247-251.
    2. Hogarty, Thomas F & Elzinga, Kenneth G, 1972. "The Demand for Beer," The Review of Economics and Statistics, MIT Press, vol. 54(2), pages 195-198, May.
    3. Ohtani, Kazuhiro & Kakimoto, Sumio & Abe, Kenzo, 1990. "A gradual switching regression model with a flexible transition path," Economics Letters, Elsevier, vol. 32(1), pages 43-48, January.
    4. Johnson, James A & Oksanen, Ernest H, 1977. "Estimation of Demand for Alcoholic Beverages in Canada from Pooled Time Series and Cross Sections," The Review of Economics and Statistics, MIT Press, vol. 59(1), pages 113-118, February.
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    Cited by:

    1. Benjamin Volland, 2013. "The History of an Inferior Good: Beer Consumption in Germany," Papers on Economics and Evolution 2012-19, Philipps University Marburg, Department of Geography.
    2. Wilson, Norbert L.W. & Bray, Victoria, 2010. "It Happened All at Once: Switching Regressions, Gravity Models and Food Safety," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61825, Agricultural and Applied Economics Association.

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