Back to the future? Habits and rational addiction in UK tobacco and alcohol demand.

Fanelli, Luca ; Mazzocchi, M. (2004) Back to the future? Habits and rational addiction in UK tobacco and alcohol demand. [Preprint]
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Abstract

This paper develops a feasible dynamic modelling approach for the Almost Ideal Demand System, which is consistent with the rational addiction theory. The forward-looking hypothesis is combined with that of convex adjustment costs in the presence of non-stationary cointegrated variables. Estimation is based on a two-step strategy based on cointegration and GMM techniques. Results on UK tobacco and alcohol demand support the adopted specifications and highlight the degree of complementarity between addictive goods.

Abstract
Tipologia del documento
Preprint
Autori
AutoreAffiliazioneORCID
Fanelli, Luca
Mazzocchi, M.
Parole chiave
Cointegration, Demand System, Euler Equation, Forward-looking Behavior, Rational Addiction
Settori scientifico-disciplinari
DOI
Data di deposito
04 Lug 2006
Ultima modifica
16 Mag 2011 12:02
URI

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