This paper considers the relationship between alcohol price and alcohol consumption in the Czech republic in years 1996 - 2008. The purpose of the paper is to find appropriate econometric model and identify the price elasticity of alcohol demand in the Czech Republic. Simultaneous equations model was chosen as the most suitable one. No statistically significant relationship between alcohol price and alcohol consumption was proved for any type of alcoholic beverage. The second part of the project... show full abstractThis paper considers the relationship between alcohol price and alcohol consumption in the Czech republic in years 1996 - 2008. The purpose of the paper is to find appropriate econometric model and identify the price elasticity of alcohol demand in the Czech Republic. Simultaneous equations model was chosen as the most suitable one. No statistically significant relationship between alcohol price and alcohol consumption was proved for any type of alcoholic beverage. The second part of the project studies the effort of states to regulate the alcohol consumption using the rise in prices. It deals with consumption taxes and minimum prices, nowadays very discussed topic in Europe. It endeavours to estimate the real impact of the regulation and compares minimum prices with consumption taxes. |