Re-examining the economic determinants of alcohol consumption in Canada: controlling for the presence of common correlated effects |
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Authors: | Jason Stevens |
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Institution: | University of Prince Edward Island, Charlottetown, PE, Canada |
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Abstract: | Alcoholic beverages represent both an important source of revenue and a driver of expenditure for provincial governments in Canada. As a result, the pricing of alcoholic beverages has substantial public policy implications. In this context, we re-examine existing work estimating the demand for three classes of alcoholic beverage (beer, wine, and spirits) by controlling for common correlated effects. The results reveal that any conclusions regarding the government’s ability to influence alcohol consumption is sensitive to the assumption that the relationship between the demand for alcoholic beverages and economic variables is identical across provinces. |
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Keywords: | Panel data common correlated effects alcoholic beverages price elasticity |
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