The long-run demand for alcoholic beverages and the advertising debate: A cointegration analysis
Advertising and Differentiated Products
ISBN: 978-0-76230-823-1, eISBN: 978-1-84950-124-8
Publication date: 4 October 2001
Abstract
Time-series models of the demand for alcoholic beverages have been criticized for use of annual data; omitted variables; mis-measurement of advertising; simultaneous equations bias; and inadequate attention to nonstationarity and dynamics. This paper reappraises the relationship between alcohol advertising, price, and consumption in a manner which speaks to these issues. Using quarterly data from 1970:1 to 1990:4 on three beverages (beer, wine, and distilled spirits), we find evidence of cointegration between beverage consumption, prices, advertising, and real income. Elasticities obtained from the estimated cointegrating vectors indicate that long-run beverage demands are both price and income inelastic. Moreover, after correcting for each of the problems described above, advertising has virtually no influence on the steady-state level of alcoholic beverage consumption.
Citation
Edward, C.N., Moran, J.R. and Nelson, J.P. (2001), "The long-run demand for alcoholic beverages and the advertising debate: A cointegration analysis", Baye, M.R. and Nelson, J.P. (Ed.) Advertising and Differentiated Products (Advances in Applied Microeconomics, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 31-54. https://doi.org/10.1016/S0278-0984(01)10003-9
Publisher
:Emerald Group Publishing Limited
Copyright © 2001, Emerald Group Publishing Limited