Beer and the business cycle

Abstract

The beer industry has traditionally been viewed as ‘recession-proof’: drinkers will have their beer notwithstanding the ecomomy's ups and downs. Few empirical studies have examined the veracity of the claim of beer's non-cyclicality and none have used monthly data. This paper uses an error–correction specification to test the sensitivity o mfonthly beer consumption to cyclical macro-economic variables over the period January 1955–December 1994. Strong support was found for the traditional view: beer is mostly immune to economic cycles.