Good times are drinking times: empirical evidence on business cycles and alcohol sales in Sweden 1861–2000

Abstract

This article studies the relationship between the business cycle and alcohol sales in Sweden using a data set for the years 1861–2000. Using wavelet-based band-pass filtering, it is found that there is a pro-cyclical relationship, i.e. alcohol sales increases in short-term economic upturns. Using moving window techniques, we see that the pro-cyclical relationship holds over the entire time period. We also find that alcohol sales are a long-memory process with nonstationary behaviour, i.e. a shock in alcohol sales has persistent effects.

Notes

The authors have no conflicts of interest.

¹Low-income earners, married women or the unemployed were not allowed to purchase alcohol at all.

²We use the second scale in a maximum overlap discrete wavelet transform (MODWT), see for example Percival and Walden (2000).