Elasticity of tobacco products in Croatia
Introduction Having an estimated cigarette price elasticity of demand for a specific country is very useful for planning purposes and it enables precise estimation of how much a tobacco tax increase will affect government revenues and tobacco use. Methods In order to estimate the price and income e...
| Main Authors: | , , , , |
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| Format: | Article |
| Language: | English |
| Published: |
European Publishing
2019-03-01
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| Series: | Tobacco Prevention and Cessation |
| Subjects: | |
| Online Access: | https://www.tobaccopreventioncessation.com/Elasticity-of-tobacco-products-in-Croatia,105270,0,2.html |
| _version_ | 1797337966717173760 |
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| author | Paško Burnać Željana Aljinović Barać Slavko Šodan Tina Vuko Andrijana Rogošić |
| author_facet | Paško Burnać Željana Aljinović Barać Slavko Šodan Tina Vuko Andrijana Rogošić |
| author_sort | Paško Burnać |
| collection | DOAJ |
| description | Introduction
Having an estimated cigarette price elasticity of demand for a specific country is very useful for planning purposes and it enables precise estimation of how much a tobacco tax increase will affect government revenues and tobacco use.
Methods
In order to estimate the price and income elasticity of cigarette demand in Croatia, we used aggregate time series data on cigarette consumption, cigarette prices, income and smoking restriction policies from 2000 to 2017. After specifying conventional cigarette demand model in linear functional form, we applied both Error Correction Model (ERM) and Autoregressive Distributed Lag (ARDL) cointegration framework to examine the short-run and long-run characteristics of cigarettes demand. In addition to aggregate time-series analysis, we used data obtained from household budget surveys (HBS) for three years (2010, 2011 and 2014) to estimate cigarette price elasticity in Croatia.
Results
The results of the research carried out within this project indicate that in Croatia, the demand for tobacco is price-sensitive. The aggregate time-series analysis suggests that a 10% increase in prices would result on the average reduction in long-term demand for cigarettes by between 4.4% and 6.1%. Estimated results of analysis based on Deaton’s (1988) model indicate that a 10% increase in cigarette price would lead to a 10.7% decrease in cigarette consumption.
Conclusions
The government should increase taxes on tobacco and related products, especially the portion of specific excise duties in order to raise their price so that tobacco products will become less affordable over time. |
| first_indexed | 2024-03-08T09:24:15Z |
| format | Article |
| id | doaj.art-ad0133c515d340a98d7b325384d54cae |
| institution | Directory Open Access Journal |
| issn | 2459-3087 |
| language | English |
| last_indexed | 2024-03-08T09:24:15Z |
| publishDate | 2019-03-01 |
| publisher | European Publishing |
| record_format | Article |
| series | Tobacco Prevention and Cessation |
| spelling | doaj.art-ad0133c515d340a98d7b325384d54cae2024-01-31T10:30:36ZengEuropean PublishingTobacco Prevention and Cessation2459-30872019-03-015Supplement10.18332/tpc/105270105270Elasticity of tobacco products in CroatiaPaško Burnać0Željana Aljinović Barać1Slavko Šodan2Tina Vuko3Andrijana Rogošić4University of Split, Faculty of Economics, Business and Tourism, CroatiaUniversity of Split, Faculty of Economics, Business and Tourism, CroatiaUniversity of Split, Faculty of Economics, Business and Tourism, CroatiaUniversity of Split, Faculty of Economics, Business and Tourism, CroatiaUniversity of Split, Faculty of Economics, Business and Tourism, CroatiaIntroduction Having an estimated cigarette price elasticity of demand for a specific country is very useful for planning purposes and it enables precise estimation of how much a tobacco tax increase will affect government revenues and tobacco use. Methods In order to estimate the price and income elasticity of cigarette demand in Croatia, we used aggregate time series data on cigarette consumption, cigarette prices, income and smoking restriction policies from 2000 to 2017. After specifying conventional cigarette demand model in linear functional form, we applied both Error Correction Model (ERM) and Autoregressive Distributed Lag (ARDL) cointegration framework to examine the short-run and long-run characteristics of cigarettes demand. In addition to aggregate time-series analysis, we used data obtained from household budget surveys (HBS) for three years (2010, 2011 and 2014) to estimate cigarette price elasticity in Croatia. Results The results of the research carried out within this project indicate that in Croatia, the demand for tobacco is price-sensitive. The aggregate time-series analysis suggests that a 10% increase in prices would result on the average reduction in long-term demand for cigarettes by between 4.4% and 6.1%. Estimated results of analysis based on Deaton’s (1988) model indicate that a 10% increase in cigarette price would lead to a 10.7% decrease in cigarette consumption. Conclusions The government should increase taxes on tobacco and related products, especially the portion of specific excise duties in order to raise their price so that tobacco products will become less affordable over time.https://www.tobaccopreventioncessation.com/Elasticity-of-tobacco-products-in-Croatia,105270,0,2.htmltobacco productscroatia |
| spellingShingle | Paško Burnać Željana Aljinović Barać Slavko Šodan Tina Vuko Andrijana Rogošić Elasticity of tobacco products in Croatia Tobacco Prevention and Cessation tobacco products croatia |
| title | Elasticity of tobacco products in Croatia |
| title_full | Elasticity of tobacco products in Croatia |
| title_fullStr | Elasticity of tobacco products in Croatia |
| title_full_unstemmed | Elasticity of tobacco products in Croatia |
| title_short | Elasticity of tobacco products in Croatia |
| title_sort | elasticity of tobacco products in croatia |
| topic | tobacco products croatia |
| url | https://www.tobaccopreventioncessation.com/Elasticity-of-tobacco-products-in-Croatia,105270,0,2.html |
| work_keys_str_mv | AT paskoburnac elasticityoftobaccoproductsincroatia AT zeljanaaljinovicbarac elasticityoftobaccoproductsincroatia AT slavkosodan elasticityoftobaccoproductsincroatia AT tinavuko elasticityoftobaccoproductsincroatia AT andrijanarogosic elasticityoftobaccoproductsincroatia |