State Tax Changes and Quasi-Experimental Price Elasticities of U.S. Cigarette Demand: An Update

Journal of Economics and Finance, vol. 28, no. 3, pp. 422-429

Posted: 6 Apr 2016

See all articles by Badi H. Baltagi

Badi H. Baltagi

Syracuse University; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Rajeev K. Goel

Illinois State University - Department of Economics

Date Written: 2004

Abstract

This paper uses 336 state tax changes across the U.S. spanning 42 years (1956–1997) to provide an updated look at the quasi-experimental price elasticities of cigarette demand. It also studies the sensitivity of these elasticity estimates to changes in the cigarette market over time as well as their sensitivity to border-effect purchases. Besides replicating earlier findings, the results show a downward trend in these elasticities over time and sensitivity to border effect purchases. Policy implications are discussed.

Suggested Citation

Baltagi, Badi H. and Goel, Rajeev K., State Tax Changes and Quasi-Experimental Price Elasticities of U.S. Cigarette Demand: An Update (2004). Journal of Economics and Finance, vol. 28, no. 3, pp. 422-429, Available at SSRN: https://ssrn.com/abstract=2758948

Badi H. Baltagi

Syracuse University ( email )

426 Eggers Hall
Syracuse, NY 13244-1020
United States
315-443-1630 (Phone)
315-443-1081 (Fax)

HOME PAGE: https://pbaltagi.wix.com/badibaltagi

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Rajeev K. Goel (Contact Author)

Illinois State University - Department of Economics ( email )

Normal, IL 61790-4200
United States

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