Estimation of tobacco price elasticity in Serbia using aggregate time-series data
Jovanović Olivera, Zubović Jovan, Vladisavljević Marko, Bodroža Duško, Ljumović Isidora, Domazet Ivana, Đukić Mihajlo
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.
Keywords: tobacco products, consumption, elasticity, price