D12

Consumer Economics: Empirical Analysis

The Demand for Cigarettes: New Evidence from South Africa

This paper provides an extensive analysis of the demand for cigarettes based on longitudinal data drawn from the South Africa National Income and Dynamic Study (NIDS: 2008 - 2014). We compare the results of the pooled OLS (POLS), the standard two-part model, the random and the fixed effect (RE, FE) panel regression. Like previous evidence into cigarette prices, we obtain negative price elasticity of demand for cigarettes, with the conditional elasticity (POLS and RE estimates) signicantly smaller than the total price elasticity (two-part model estimates).

Festival Fringe Production and the Long Tail

In the past 15 years, there has been a worldwide proliferation of arts festivals, including so-called “fringe” festivals, which encouraged more experimental and avant-garde productions. While fringe festival productions had the potential to generate significant income for producers, their aims were primarily related to artistic innovation and it is well known that putting on a fringe show is highly unlikely to provide financial gain for most producers.

Assessing the Causal Impact of Tobacco Expenditure on Household Spending Patterns in Zambia

This paper adds to the literature on the crowding out effect of tobacco expenditure in two ways. Firstly, the paper uses expenditure data from a low income sub-Saharan African country, Zambia, where most households are poor. Secondly, unlike previous studies, we relax the exclusion restriction and allow the standard instrumental variable used in the literature, the adult sex ratio, to be correlated with the error term. We consider the relaxation of this restriction to be reasonable given what we know about the effects of household structure on households’ expenditure decisions.

Evolution of Monetary Policy Transmission Mechanism in Malawi: A TVP-VAR with Stochastic Volatility Approach

This paper investigates the evolution of monetary transmission mechanism in Malawi between 1981 and 2010 using a time varying parameter vector autoregressive (TVP-VAR) model with stochastic volatility. We evaluate how the responses of real output and general price level to bank rate, exchange rate and credit shocks have changed over time since Malawi adopted financial reforms in 1980s. The paper finds that inflation, real output and exchange rate responses to monetary policy shocks changed over the period under review.

Time-Varying Parameter in the Almost Ideal Demand System and the Rotterdam Model: Will the Best Specification Please Stand Up?

This paper assesses the ability of the Rotterdam model and of three versions of the almost ideal demand system (AIDS) to recover the time-varying elasticities of a true demand system and to satisfy theoretical regularity. Using Monte Carlo simulations, we nd that the Rotterdam model performs better than the linear-approximate AIDS at recovering the signs of all the time-varying elasticities. More importantly, the Rotterdam model has the ability to track the paths of time-varying income elasticities, even when the true values are very high.

Consumer demand for alcoholic beverages and tobacco in Lesotho: A double-hurdle approach

In this paper, we estimate income elasticities and investigate the determinants of alcohol and tobacco consumption in Lesotho using a Double-Hurdle model on the 2002/03 Lesotho HBS data. The results reveal that both alcohol and tobacco are income inelastic with estimated elasticities of 0.6553 and 0.3561, respectively. Given this, therefore, we argue that differentiated tax hikes, with a relatively higher rate on tobacco, can be more effective both as a consumption deterrent and revenue increasing policy, without much compromise on employment and poverty.

Financial Reforms and Consumption Behaviour in Malawi

The purpose of the study is to examine whether financial reforms implemented in the 1980's and 1990's altered the pattern of aggregate consumption behaviour in Malawi. More specifically, the study questions whether financial reforms affected consumption behaviour by reducing the excess sensitivity of changes in consumption to changes in current income using the Permanent income hypothesis (PIH) framework. If it happens that excess sensitivity does not reduce, the paper explores further whether the failure is due to liquidity constraints or myopia.

Are arts events a good way of augmenting the economic impact of sports? The case of the 2010 Soccer World Cup and the National Arts Festival in South Africa

Despite the debate about whether arts consumers are also sports consumers, many countries have used cultural events to leverage further tourism spending from sports events, the most famous example being the cultural Olympics. This paper reports the findings of research conducted at the 2010 South African National Arts Festival, which was specifically timed to coincide with Soccer World Cup matches being played in a nearby city. Of the 600 interviews conducted with Festival-goers, only 23% reported also attending World Cup soccer matches.

Clean Fuel-Saving Technology Adoption in Urban Ethiopia

The heavy dependence and inefficient utilization of biomass resources have contributed to the depletion of forest resources in Ethiopia, while the use of traditional cooking technology, one source of inefficient biomass resource use, has been linked to indoor air pollution and poor health. In response, the government and other institutions have pushed for the adoption of new cooking technologies. This research examines the speed of adoption of Mirt and Lakech cook stoves — two examples of new cooking technologies — in urban Ethiopia.

Who is Credit Constrained Among Denied or Discouraged Borrowers?

Since the seminal work of Jappelli (1990), it has become standard to identify as liquidity-constrained, borrowers who were either turned down for credit or did not apply because they might be turned down. In this paper, we show that the so-called “denied or discouraged” proxy does not capture accurately consumers’ credit access when consumers seek credit to finance expenditure on durable goods. Our sample is drawn from the Panel Study of Income Dynamics. We document systematic misclassification of unconstrained households as constrained.

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