Short-run and long-run relationships in the consumption of alcohol in the Scandinavian countries

Abstract

Traditionally, the Scandinavian countries have been characterized as spirits and beer consuming countries and a century ago the historical background was decades of relatively heavy drinking behaviour with spirit as the preferred beverage. Therefore, it might be expected that alcohol consumption – especially in the last part of the 19th century and the beginning of the 20th century – would behave in a counter-cyclical manner, i.e. heavy drinking during severe recessions characterized by harsh economic conditions. Using long-run time series data for alcohol consumption levels in the Scandinavian countries the question of a counter-cyclical or pro-cyclical behaviour is addressed – with the business cycle measured as the GDP – and the empirical findings are that generally, alcohol consumption behaves in a pro-cyclical manner in the short run, and with no long-run relationship concerning real income.Alcohol consumption; Business cycles; Scandinavia