The Elasticity of Tobacco Products in Macedonia
Abstract: The aim of this analysis is to explore the key factors that affect the aggregate demand for tobacco products in Macedonia. Given data limitations, we focus only on the demand for cigarettes, as data on other tobacco products are not available. Following the mainstream theoretical frameworks and empirical approaches, the analysis first estimates the price elasticity of demand, and then calculates the likely effect of an increase in excise duty rates on the prices of cigarettes, consumption of cigarettes and the excise revenues.
Keywords: tobacco products, cigarrettes, error correction model, price elasticiy, income elasticity