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Threshold Effects in Cigarette Addiction: An Application of the Threshold Model in Dynamic Panels

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  • Yi-Chi Chen

    (Department of Economics, National Cheng Kung University)

  • Chang-Ching Lin

    (Institute of Economics, Academia Sinica)

Abstract

We adopt the threshold model of myopic cigarette addiction to US state-level panel data. The threshold model is used to identify the structural effects of cigarette demand determinants across the income stratification. Furthermore, we apply a bootstrap approach to correct for the small-sample bias that arises in the dynamic panel threshold model with fixed effects. Our empirical results indicate that there exists the heterogeneity of smoking dynamics across consumers.

Suggested Citation

  • Yi-Chi Chen & Chang-Ching Lin, 2010. "Threshold Effects in Cigarette Addiction: An Application of the Threshold Model in Dynamic Panels," Economics Bulletin, AccessEcon, vol. 30(4), pages 3128-3142.
    • Handle: RePEc:ebl:ecbull:eb-10-00275
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    More about this item

    Keywords

    Cigarettes demand; price elasticity; threshold regression model; dynamic panel model; bias correction; bootstrap;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • I1 - Health, Education, and Welfare - - Health

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