Estimation of Tobacco Products Price and Income Elasticity using Aggregate Data

Main Article Content

Olivera Jovanovic
Jovan Zubović
Marko Vladisavljević
Duško Bodrož
Isidora Ljumović
Ivana Domazet
Mihajlo Đukić

Abstract

In order to estimate elasticity of demand for tobacco products authors of this paper used aggregate level data. Research among low and middle income countries over the world empirically showed that demand for tobacco products is usually inelastic. Analysis conducted in the Republic of Serbia showed that price elasticity ranged between -0.76 and -0.62 while income elasticity ranged between 0.34 and 0.39.  The main aim of this paper is to estimate long run and short run demand elasticity based on aggregate level data for period 2002-2016 using Error Correction model. This research is unique in the SEE countries, while research conducted in other low and middle income countries in Western Balkan region showed similar results.

Article Details

Section

Articles

References

Chaloupka IV, F. J., Peck, R., Tauras, J. A., Xu, X., & Yurekli, A. (2010). Cigarette excise taxation:

the impact of tax structure on prices, revenues, and cigarette smoking (No. w16287). National

Bureau of Economic Research.

Domazet, I., Stošić, I. (2013). “Strengthening the competitiveness of Serbian economy and the

corporate market restructuring”, Economic Analysis, Vol. 46, No ¾, pp. 108-124.

Đuričin S., Pantić O. (2015). “The Development of Micro-Crediting as a factor of Promoting

Women Entrepreneurship in Serbia”, Journal for Women Entrepreneurship and Education

(JWEE), no1/2, pp. 50-66.

Hjalmarsson E., Österholm P. (2007), Testing for Cointegration Using the Johansen Methodology

when Variables are Near-Integrated, IMF Working Paper, Western Hemisphere Division.

Johansen, S. 1995. Likelihood-Based Inference in Cointegrated Vector Autoregressive Models.

Oxford: Oxford University Press.

Ognjenović K. (2013) “How structural changes affect enterprises’ expectations about

employment in Serbia”, Economic Analysis, Vol. 46, No ¾, pp. 141-152.

Mladenović Z., Nojković A. (2012), Primenjena analiza vremenskih serija, Centar za izdavačku

delatnost Ekonomskog fakulteta u Beogradu

Mladenović Z., Petrović P. (2007), Uvod u ekonometriju, Centar za izdavačku delatnost,

Ekonomski fakultet Univerziteta u Beogradu

Pavlović D., Ljumović I. (2016), “Prospects and Challenges for Female Leaders from the Balkans”,

Journal for Women Entrepreneurship and Education (JWEE), no1/2, pp. 58-75.

Ross, H., & Al-Sadat, N. A. (2007). Demand analysis of tobacco consumption in Malaysia. Nicotine

& tobacco research, 9(11), 1163-1169.