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Short-Run and Long-Run Elasticities for Canadian Consumption of Alcoholic Beverages: An Error-Correction Mechanism/Cointegration Approach

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  • Johnson, James A, et al

Abstract

Elasticities for beer, wine and spirits are estimated for each of the provinces of Canada over the period 1956-83, using unrestricted dynamic regressions modeled after the error-correction mechanism. Alternative long-run estimates are also obtained from cointegrating regressions. Estimates vary markedly across provinces and suggest that increases in price will reduce consumption of all beverages in the short run, but in the long run no evidence is found that spirits use is price-sensitive. Increases in the legal drinking age reduce consumption in the short run but there is little indication of a long-run effect. The estimated income elasticity of beer is small while the estimated income elasticities for spirits and wine are substantially larger, especially in the long run. Coauthors are Ernest H. Oksanen, Michael R. Veall, and Deborah Fretz. Copyright 1992 by MIT Press.

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  • 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.
  • Handle: RePEc:tpr:restat:v:74:y:1992:i:1:p:64-74
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    Cited by:

    1. Chia-Lin Chang & Thanchanok Khamkaew & Michael McAleer, 2010. "Estimating Price Effects in an Almost Ideal Demand Model of Outbound Thai Tourism to East Asia," CIRJE F-Series CIRJE-F-735, CIRJE, Faculty of Economics, University of Tokyo.
    2. Koukouritakis, Minoas, 2005. "EU Accession Effects on the Demand for Manufactures: the Case of Greece," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 58(4), pages 471-488.
    3. Jeffrey D. Kubik & John R. Moran, 2001. "Can Policy Changes Be Treated as Natural Experiments? Evidence from State Excise Taxes," Center for Policy Research Working Papers 39, Center for Policy Research, Maxwell School, Syracuse University.
    4. Jan Bentzen & Tor Eriksson & Valdemar Smith, 2001. "Alcohol Consumption in European Countries Time series based tests of convergence," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 60, pages 59-74.
    5. Lyons, Sean & Mayor, Karen & Tol, Richard S.J., 2009. "Convergence of consumption patterns during macroeconomic transition: A model of demand in Ireland and the OECD," Economic Modelling, Elsevier, vol. 26(3), pages 702-714, May.
    6. Evens SALIES, 2004. "The consumption of ordinary wines in France : the effect of administered prices," Econometrics 0406003, EconWPA.
    7. Anindya Sen & May Luong, 2008. "Estimating The Impact Of Beer Prices On The Incidence Of Sexually Transmitted Diseases: Cross-Province And Time Series Evidence From Canada," Contemporary Economic Policy, Western Economic Association International, vol. 26(4), pages 505-517, October.
    8. Karagiannis, Giannis & Katranidis, Stelios D. & Velentzas, K., 2000. "An error correction almost ideal demand system for meat in Greece," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 22(1), January.
    9. John Eakins & Liam Gallagher, 2003. "Dynamic almost ideal demand systems: an empirical analysis of alcohol expenditure in Ireland," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1025-1036.
    10. Lariviere, Eric & Larue, Bruno & Chalfant, Jim, 2000. "Modeling the demand for alcoholic beverages and advertising specifications," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 22(2), March.
    11. Charles J. Romeo, 2016. "Incorporating Prior Information into A GMM Objective For Mixed Logit Demand Systems," Journal of Industrial Economics, Wiley Blackwell, vol. 64(2), pages 336-363, June.
    12. Jonathan M. Nzuma & Rakhal Sarker, 2010. "An error corrected almost ideal demand system for major cereals in Kenya," Agricultural Economics, International Association of Agricultural Economists, vol. 41(1), pages 43-50, January.
    13. Pinkse, Joris & Slade, Margaret E., 2004. "Mergers, brand competition, and the price of a pint," European Economic Review, Elsevier, vol. 48(3), pages 617-643, June.
    14. L. Fanelli & M. Mazzocchi, 2004. "Back to the future? Habits and rational addiction in UK tobacco and alcohol demand," Quaderni di Dipartimento 0, Department of Statistics, University of Bologna.

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