PRICE TRANSMISSION AND PASS-THROUGH EFFECT IN U.S. ALCOHOLIC BEVERAGE INDUSTRIES

Authors : T Parker BALLİNGER, J Bert STİNE, Mark A THOMPSON

Pages : 23-38

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Publication Date : 2009-04-21

Article Type : Research Paper

Abstract :This paper examines the time-series properties of price changes among sectors of the U.S. alcoholic beverage industries. Utilizing vector autoregression and impulse response analysis, the pass-through effect between the producer price index and consumer price index is examined for breweries, distilleries, and wineries. The findings suggest that industry-level price changes are stationary with significant pass-through effects in breweries and wineries. The implications are that price shocks are temporary and may transmit onto consumers in the form of higher (or lower) prices. Understanding industry-level price dynamics are important to managers in formulating long-term cost estimates, budget formation, and forecasting price changes in alcoholic beverage industries.
Keywords : Inflation, Stationarity, Vector Autoregression, Pass Through Effect, Alcoholic Beverage Industries