Price transmission and pass-through effect: the case of alcoholic beverage industries

Özet

\r\n 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.\r\n