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Modelling the trend and seasonality in the consumption of alcoholic beverages in the United Kingdom

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  • Liam Lenten
  • Imad Moosa

Abstract

A univariate time series analysis of the consumption of beer, wine and spirits in the UK over the period 1964-1995 is presented. The analysis shows that the consumption of beer and wine exhibits stochastic seasonality while the consumption of spirits exhibits deterministic seasonality. Moreover, the three series are found to have stochastic trends. Analysis of the out-of-sample forecasting power of the various models reveals that the model with stochastic trend and seasonality is superior to other models. The results cast doubt on the validity and soundness of the practice of modelling the consumption of alcoholic beverages by assuming deterministic trend and seasonality.

Suggested Citation

  • Liam Lenten & Imad Moosa, 1999. "Modelling the trend and seasonality in the consumption of alcoholic beverages in the United Kingdom," Applied Economics, Taylor & Francis Journals, vol. 31(7), pages 795-804.
    • Handle: RePEc:taf:applec:v:31:y:1999:i:7:p:795-804
    DOI: 10.1080/000368499323760
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    References listed on IDEAS

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    1. M. A. Salisu & V. N. Balasubramanyam, 1997. "Income and price elasticities of demand for alcoholic drinks," Applied Economics Letters, Taylor & Francis Journals, vol. 4(4), pages 247-251.
    2. Davidson, James E H, et al, 1978. "Econometric Modelling of the Aggregate Time-Series Relationship between Consumers' Expenditure and Income in the United Kingdom," Economic Journal, Royal Economic Society, vol. 88(352), pages 661-692, December.
    3. McGuinness, Tony, 1980. "An Econometric Analysis of Total Demand for Alcoholic Beverages in the U.K., 1956-75," Journal of Industrial Economics, Wiley Blackwell, vol. 29(1), pages 85-109, September.
    4. Harvey, Andrew & Scott, Andrew, 1994. "Seasonality in Dynamic Regression Models," Economic Journal, Royal Economic Society, vol. 104(427), pages 1324-1345, November.
    5. Walsh, Brendan M, 1982. "The Demand for Alcohol in the UK: A Comment," Journal of Industrial Economics, Wiley Blackwell, vol. 30(4), pages 439-446, June.
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    Cited by:

    1. Murali Adhikari & Krishna Paudel & Laxmi Paudel & James Bukenya, 2007. "Modelling swine supply response using a structural time series approach," Applied Economics Letters, Taylor & Francis Journals, vol. 14(7), pages 467-472.
    2. Murali Adhikari & Krishna Paudel & Jack Houston & James Bukenya, 2008. "Assessing the impacts of stochastic trend in crop acreage supply response model," Applied Economics, Taylor & Francis Journals, vol. 40(3), pages 295-302.
    3. I. A. Moosa & J. L. Baxter, 2002. "Modelling the trend and seasonals within an AIDS model of the demand for alcoholic beverages in the United Kingdom," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(2), pages 95-106.
    4. Murali Adhikari & Krishna Paudel & Jack Houstan & James Bukenya, 2007. "Dairy supply response under stochastic trend and seasonality," Applied Economics Letters, Taylor & Francis Journals, vol. 14(12), pages 887-891.

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