Demanda de cigarrillos en Uruguay: análisis nacional con datos mensuales

Zuleika Ferre (), Mariana Gerstenblüth () and Patricia Triunfo ()

No 623, Documentos de Trabajo (working papers) from Department of Economics - dECON

Abstract: The demand for legally sold cigarettes in Uruguay has been estimated using monthly data spanning from January 1997 to June 2022. This estimation involved employing time series analysis alongside a two-stage estimation approach employing instrumental variables. This extended period under consideration allows for a comprehensive control over the influence of various tobacco control policies that were implemented, starting in 2005. The findings reveal an inelastic demand pattern, indicating a price elasticity ranging between -0.6 and -0.8, depending on the estimation method used. Additionally, the income elasticity was found to be less than one, specifically between 0.4 and 0.5. Notably, the implemented tobacco control policies, such as the enforcement of 100% smoke-free spaces (since March 2006), the adoption of single presentation (since February 2009), the complete ban on advertising (since November 2014), and the implementation of flat or neutral packaging (since January 2020), exhibited significant negative effects. While these policies form part of a comprehensive campaign, it's challenging to isolate their individual impacts or assess their combined synergy. Nevertheless, the results underscore their collective relevance in curbing cigarette consumption. In line with commitments outlined in the World Health Organization's Framework Convention on Tobacco Control, simulations involving successive tax increases from 2024 to 2028 were conducted. The analysis suggests that a 56% real-term increase in the specific tax (IMESI) would potentially lead to a reduction in the smoking population, estimated between 14% and 21%, equating to approximately 52,000 to 74,000 fewer smokers. Moreover, this increase is projected to result in a decline in the consumption of legal cigarettes by a range of 30% to 44%. Interestingly, unlike the observed 8% decline in real collection between 2022 and 2023, it is anticipated that these tax adjustments could potentially trigger an increase in collection ranging between 3% and 7%.

Keywords: times series; instrumental variables; cigarette; tobacco; demand elasticity; income elasticity; simulation; Uruguay (search for similar items in EconPapers)
JEL-codes: D12 I12 I18 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2023-12
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Persistent link: https://EconPapers.repec.org/RePEc:ude:wpaper:0623

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