Forecasting the consumption of alcoholic beverages in Finland: A box-Jenkins approach

In this report the results of identifying, estimating and diagnostically checking short-term rational distributed lag (transfer function) models for forecasting the consumption of alcoholic beverages other than beer in Finland are reviewed and compared with some other Scandinavian studies. The output of models is the logarithm of the monthly consumption of alcoholic beverages while the only specified input is the logarithm of the price index of alcoholic beverages. Other explanatory variables are included in the ARIMA noise. The importance of the price variable is demonstrated by comparing ex post predictions obtained using different methods.     

Deep habits in consumption: a spatial panel analysis using scanner data

Using scanner data from a large European retailer, this paper empirically assesses deep habit formation in consumption. Deep habit formation constitutes a possible source of price stickiness and helps to mimic procyclical labour and real wage dynamics that are present in macrodata. To gauge the existence and the extent of deep habits in consumption, we estimate a dynamic time–space simultaneous model for consumption expenditure at different levels of product aggregation. This spatial panel model enables us to test for both internal and external deep habit formation at the same time. The former captures inertia or persistence in consumption and is included in the empirical specification as a time lag. The latter captures preference interdependence across households and is captured by a spatial lag. Our results show mixed evidence with respect to internal habit formation, whereas the external habit effect is almost always positive and significant.     

Modelling the trend and seasonality in the consumption of alcoholic beverages in the United Kingdom

A univariate time series analysis of the consumption of beer, wine and spirits in the UK over the period 1964–1995 is presented. The analysis shows that the consumption of beer and wine exhibits stochastic seasonality while the consumption of spirits exhibits deterministic seasonality. Moreover, the three series are found to have stochastic trends. Analysis of the out-of-sample forecasting power of the various models reveals that the model with stochastic trend and seasonality is superior to other models. The results cast doubt on the validity and soundness of the practice of modelling the consumption of alcoholic beverages by assuming deterministic trend and seasonality.     

An investigation into the demand for alcoholic beverages in Canada: a choice between the almost ideal and the Rotterdam models

In this article I investigate the historical pattern of interactions in the demand for three categories of alcoholic beverages in Canada, using both the differential Almost Ideal and the differential Rotterdam demand systems. I evaluate these models based on several decision criteria including model encompassment (based on the J-test), structural stability, conformity with demand theory and the credibility of the estimated price and income responses, in an attempt to determine which of these models is better suited for explaining the demand for alcoholic beverages. The results reveal that both models satisfy the restrictions of demand theory and of structural stability but the Rotterdam model is preferable on grounds of the remaining two criteria.     

Lottery expenditures in Canada: a regional analysis of determinants and incidence

This article examines two issues; first, it evaluates the statistical significance of a number of socio-economic and demographic variables on the level of household lottery expenditures in the six regions of Canada. While some household characteristics vary in the extent to which they significantly affect the level of lottery expenditures across regions (wealth, age, occupation, mother tongue and urban location, for example), others are significant in every region. Regional consistency exists in the statistical significance of after tax household income, sex and education of the head of household – lottery expenditures increase as incomes increase; lottery expenditures are significantly lower for female heads of households than for their male counterparts; lottery expenditures decline as the education level of the head of household increases. Second, lottery expenditures are found to be regressive, although the degree of regressivity is less than for lotteries in the United States.     

The government spending and private consumption: a panel cointegration analysis

In this article, whether an increase in government spending will crowd out the private consumption is re-examined. This article augments the empirical literature by extending this issue to panel data. The empirical framework applies the panel cointegration model, dynamic OLS (DOLS), proposed by Kao and Chiang [On the estimation and inference of a cointegrated regression in panel data. Working Paper, Economics Department, Syracuse University, 1999.]. Evidence from 24 OECD countries indicates a significant degree of substitutability between government spending and private consumption when the real disposable income is included, which rejects the permanent income hypothesis. The existence of crowding out renders the Keynesian plea for expansionary fiscal policy unconvincing.     

Income and religion: a heterogeneous panel data analysis

A recent empirical literature has addressed the relationship between income and religion, but most of the studies are based on microdata. Macroeconomic analysis of the issue has largely ignored the potential heterogeneity between countries. Using retrospective data on church attendance rates for a panel of countries between 1925 and 1990, we apply heterogeneous panel data estimators and reveal that the effect of participation in religious activities on income per capita is mostly non-significant. This is consistent with some of the recent research that casts doubt onto the influence of religion on income, once causality is taken into account.     

Energy consumption and economic growth in Asian economies: A more comprehensive analysis using panel data

This paper applies the most recently developed panel unit root, heterogeneous panel cointegration and panel-based error correction models to re-investigate co-movement and the causal relationship between energy consumption and real GDP within a multivariate framework that includes capital stock and labor input for 16 Asian countries during the 1971–2002 period. It employs the production side model (aggregate production function). The empirical results fully support a positive long-run cointegrated relationship between real GDP and energy consumption when the heterogeneous country effect is taken into account. It is found that although economic growth and energy consumption lack short-run causality, there is long-run unidirectional causality running from energy consumption to economic growth. This means that reducing energy consumption does not adversely affect GDP in the short-run but would in the long-run; thus, these countries should adopt a more vigorous energy policy. Furthermore, we broaden the investigation by dividing the sample countries into two cross-regional groups, namely the APEC and ASEAN groups, and even more important results and implications emerge.     

Determinants of international tourism: a three-dimensional panel data analysis

International tourism is a fast growing industry generating half a trillion dollars in annual revenues and accounting for almost 10%?of total international trade, and almost half of total trade in services. Yet, it has so far failed to receive the attention it deserves from mainstream economics. This paper attempts to provide an initial understanding of the determinants of international tourism. This paper claims that international tourism, as other forms of trade in services, is driven by unique factors of production, and may be better dealt with in a single industry study rather than in a general equilibrium trade model. In order to understand these determinants the world is viewed as a market of differentiated products, and a discrete choice estimation technique is applied to a large three-dimensional data set of tourist flows. It is shown that a relatively simple estimation technique, combined with a rich data set, can deliver reasonable substitution patterns. It is found, among other things, that political risk is very important for tourism, and that exchange rates matter mainly for tourism to developed countries. These have exchange rate elasticity of about one.     

Economic growth drag in the Central China: evidence from a panel analysis

This article employs recently developed panel methods to test for unit roots, cointegration and Granger causality to justify and estimate the drag induced by resource constraint and environmental pollution for the Central China. The results of the panel cointegration test show that there is a stable long run relationship amongst total output, capital, labour, land, water and SO₂ when total output is the dependent variable. The results of the causality test with Error Correction Model (ECM) analysis suggest that the available water resource and environmental pollutant have no impacts on total output temporarily, but in the long‐run there is a Granger causality running from these variables to total output, indicating the economic growth drag induced by the natural resource and environmental pollution can be further estimated. Given the stable cointegration and significant Granger causality being, the study shows that the drag on the total output reduces annual economic growth rate by about 1.1 percentage points for the Central China as a whole and there is a significant difference on the aggregated and disaggregated drags for the six provinces, which indicates that natural resource and environmental constraints so far incorporated into production probably have a modest effect over the past 31 years for the Central China.     

Entrepreneurship and income inequality: a spatial panel data analysis

The main objective of this paper is to empirically analyze the relationship between entrepreneurship and income inequality. We use a spatial panel data analysis for both 33 high-income countries and 39 middle- and low-income countries over a period of 11 years. Estimation results and rigorous diagnostic analysis suggest that: (i) there is a strong support for the existence of an inverted U-shaped relationship between entrepreneurship and income inequality espoused by the Kuznets Curve hypothesis; (ii) the relationship between entrepreneurship and income inequality is negatively moderated by country’s level of economic development; (iii) regardless of income inequality levels, entrepreneurship has a non-linear relationship with income per capita; (iv) gross domestic expenditure on research and development exhibits significant negative impacts on entrepreneurship; (v) significant mixed effects on the likelihood of entrepreneurial activity are observed with governance, globalization, population growth rate, and competitiveness variables; (vi) there are significant mixed feedback effects on entrepreneurship; and (vii) there are statistically significant, positive as well as negative spatial spillovers to country-level entrepreneurial activity.     

Technological progress and scientific indicators: a panel data analysis

Total factor productivity (TFP) is generally interpreted to be a proxy for technological advancement. In this paper, we use stochastic frontier analysis to decompose the growth in TFP into three components: technological progress, scale effect and change in technical efficiency. Then, we conduct a comprehensive panel data analysis using the technological progress component of the TFP growth and several scientific and technological indicators using data from 160 countries over the period from 1960 to 2009. Our results generally show that the technological progress component of the TFP growth properly reflects certain dimensions of actual scientific and technological progress. However, we also find that this result is somewhat sensitive to different econometric specifications and assumptions.     

The macroeconomy and microfinance outreach: a panel data analysis

This study examines the effects of macroeconomic and institutional factors on microfinance institution (MFI) outreach. To capture the performance of the macroeconomy, we include proxies for institutional quality, economic growth, FDI inflow, unemployment rate, inflation and the prevalence of wage-earning jobs. Further, we examine effects on outreach along the dimensions of outreach depth and outreach breadth. Using data on 1526 MFIs from 99 countries over the period 2000 to 2015, our results suggest that environments characterised by high levels of economic performance and good institutions tend to hinder outreach performance. These results suggest that MFIs depend on a poor economy to thrive given the informal nature of microfinance.     

The patterns and determinants of longevity in Russia's regions: Evidence from panel data

In this paper we examine whether regions of Russia have been converging or diverging in their longevity levels during the 1990s and evaluate the divergence effect of the 1998 financial crisis. We also estimate the impact of changes in poverty and public health spending on inter-temporal variations in longevity using regional-level panel data for 77 Russian regions from 1994 to 2000. Finally, we investigate the extent to which the gradual recovery in longevity observed after 1994 was derailed by the 1998 financial crisis and the public policy shifts required for regions to regain their Soviet-era levels of longevity. We find a significant negative effect of the 1998 crisis on longevity independently of the factors related directly to poverty and public health spending. In addition, a permanent negative shock to the incidence of poverty and the amount of publicly-provided health care in a region has enduring consequences on the population's health. Finally, the effect of increases in public health spending on longevity is related positively to the incidence of poverty. Journal of Comparative Economics 33 (4) (2005) 788–813.     

Spatial analysis of municipal water demand: a panel data approach

While the municipal water demand literature is well developed, one area that is understudied is the impact of spatial effects. After controlling for factors shown to impact demand, this study applies spatial econometric methods via a spatial weights matrix to a panel municipal water consumption data set. While diagnostics suggest the presence of spatial lag and spatial error, thus indicating the potential usefulness of spatial empirical methods, several important pitfalls must be acknowledged. First, the application of spatial weights in a panel setting is computationally intensive, especially when the number of time periods or observations is large, and perhaps necessitates aggregation. Second, because most users in a municipality are likely to be subject to similar utility action, climate, etc., a spatial lag signal may be spurious. Third, because premises served by the utility may enter or exit the data set through time, the requirement of balanced panels requires careful consideration. Fourth, if the option to use premises-level (or similar) data or aggregated data is available, it is typically advisable to use premises-level data despite the possible presence of spatial effects.     

Understanding wage determination in a multi-level bargaining system: a panel data analysis

This article presents an estimation of the elasticity of actual wages to industry-level collective bargaining thereby quantifying empirically the role of industry-level bargaining on wage determination. For this purpose, we use a unique employer–employee panel dataset covering the entire Belgian employment population over 9 years (1998–2006). Like several other European countries, e.g. Germany, France, Italy and the Netherlands, Belgium has a relatively centralised wage bargaining system, with the industry level playing the most important role. Regression results confirm that wage increases collectively decided at the industry level are, on average, fully passed on to individual wages. In addition to industry-level bargaining, we are interested in the supplementary wage increases granted at the firm level, referred to as wage drift or wage cushion in the literature. Our estimates show that wage drift is affected by company size, by the economic performance of the industry and to a much lesser extent by labour market tensions as measured by the local unemployment rate. Interestingly, our results show that industry-level bargaining also takes most of these features into account.     

Re-examining the economic determinants of alcohol consumption in Canada: controlling for the presence of common correlated effects

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.     

Market share instability in Brazilian industry: a dynamic panel data analysis

The paper investigates market share instability in the context of Brazilian industry for the 1986–1998 period. The paper proposes the use of panel data unit root tests to access market share instability for a sample of industrial firms from different sectors and therefore generalizes related time series unit root tests proposed by Gallet and List (2001 Gallet, CA and List, JA. 2001. Market share instability: an application of unit root tests for the cigarette industry. Journal of Economics and Business, 53: 473–80.  ). The results mostly indicate that one cannot reject the hypothesis of market share instability and therefore there exist some degree of market rivalry in the Brazilian case.     

Output growth and investment dynamics in Finland: a panel data analysis

This study analyzes the relationship between output growth and investment in a panel of 20 regions of Finland over the period 1975–2007. This regional study uses Granger non-causality and error-correction models. The most important finding of this study is a unidirectional causality which runs from investment to output growth. The study also verifies the existence of a positive association between growth and investment for the panel of 20 regions of Finland. These findings reconcile with the capital fundamentalists.     

Purchasing power parity across Mexican cities: a panel data analysis

This article presents three different unit root tests for panel data, the main objective is to find the level of internal integration market through the purchasing power parity (PPP) evidence, based in the Balassa–Samuelson approach. Thus, eight kinds of markets, as tradable and nontradable goods for 16 main Mexican cities during a 21 year period have been contrasted. While two tests showed the PPP validity for seven markets, the other rejected it. The results obtained moreover feed the present controversy about which test is most appropriate to test the PPP, as soon as it is highlighted new elements emerge to explain the half-life analysis.