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Finally, if advertising only induces current smokers to increase the number of cigarettes they consume, then the total ban on advertising should cause a one-time reduction in cigarette consumption that will reduce the profits of cigarette companies. However, which of these three mechanisms (if any) is correct is an empirical question.

Six European countries adopted a complete ban on cigarette advertising in the period after 1970. It this project we use annual data on smoking consumption in 22 developed countries for the 27 years between 1964 and 1990 to test the effect of a complete smoking ban on cigarette demand (giving us 594 observations). Moreover, since we have no a priori reason to choose one model specification over another, we check the stability of the estimated impact of an advertising ban on cigarette demand under several alternative model specifications.

We estimate three types of specifications of the model — the linear model, the log-linear model, and the log-log model. In general whether one uses a variable or the logarithm of the variable is the main difference in these three specifications. The linear model does not transform either the dependent or the independent variables. A variation on the linear models allows the use of the square and product of some of the independent variables in order to take care of any non-linearity in the data. The log-linear model takes the same form as the linear model except that the dependent variable is the logarithm of variable under study. Finally, in the log-log model both the dependent and independent variables are, if possible, in logarithm form.

For example, for this problem the dependent variable in any of these specifications is either the per capita consumption of tobacco or the logarithm of the per capita consumption of tobacco. The dependent variables might include (1) the real price of tobacco in each country for each year, (2) a measure of the per capita income level of the country for each year, (3) the unemployment rate of the country for each year, (4) a measure of the age distribution of the population to measure smoking intensity by age, (5) a trend variable to account for the rising awareness of the health costs of smoking, (6) a dummy variable equal to one for years that a country has a complete ban on cigarette advertising, and (7) a set of 21 dummy variables identifying the country. Let T it be the measure of per capita cigarette consumption in country i for year t ; P it , the price of tobacco; I it , the measure of per capita income level; U it , country i ’s unemployment rate in year t ; A it , country i ’s age distribution in year t ; Year , a trend variable; B it , the dummy variable for the ban; and C i , the dummy variable for country i .

    Examples of the three models are:

  1. Linear: T i t = β 0 + β 1 P i t + β 2 I i t + β U i t + β 4 A i t + β 5 Y e a r t + β 6 B i t + ε i t MathType@MTEF@5@5@+=feaagyart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr4rNCHbGeaGqiVCI8FfYJH8YrFfeuY=Hhbbf9v8qqaqFr0xc9pk0xbba9q8WqFfeaY=biLkVcLq=JHqpepeea0=as0Fb9pgeaYRXxe9vr0=vr0=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@6854@
  2. Log-Linear: ln ( T i t ) = β 0 + β 1 P i t + β 2 I i t + β U i t + β 4 A i t + β 5 Y e a r t + β 6 B i t + ε i t MathType@MTEF@5@5@+=feaagyart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr4rNCHbGeaGqiVCI8FfYJH8YrFfeuY=Hhbbf9v8qqaqFr0xc9pk0xbba9q8WqFfeaY=biLkVcLq=JHqpepeea0=as0Fb9pgeaYRXxe9vr0=vr0=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@6BC1@
  3. Log-Log: ln ( T i t ) = β 0 + β 1 ln ( P i t ) + β 2 ln ( I i t ) + β U i t + β 4 A i t + β 5 Y e a r t + β 6 B i t + ε i t MathType@MTEF@5@5@+=feaagyart1ev2aaatCvAUfeBSjuyZL2yd9gzLbvyNv2CaerbuLwBLnhiov2DGi1BTfMBaeXatLxBI9gBaerbd9wDYLwzYbItLDharqqtubsr4rNCHbGeaGqiVCI8FfYJH8YrFfeuY=Hhbbf9v8qqaqFr0xc9pk0xbba9q8WqFfeaY=biLkVcLq=JHqpepeea0=as0Fb9pgeaYRXxe9vr0=vr0=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@729B@

In models (1) and (2) it is possible to include additional explanatory variables that are the square of some of the currently included explanatory variables. In all three models it is possible to include as explanatory variables the product of the ban dummy and any of the currently included explanatory variables. Finally, in equation (2) we cannot take the logarithm of the unemployment rate because the data we have report zero levels of unemployment.

Questions & Answers

are nano particles real
Missy Reply
Hello, if I study Physics teacher in bachelor, can I study Nanotechnology in master?
Lale Reply
no can't
where we get a research paper on Nano chemistry....?
Maira Reply
nanopartical of organic/inorganic / physical chemistry , pdf / thesis / review
what are the products of Nano chemistry?
Maira Reply
There are lots of products of nano chemistry... Like nano coatings.....carbon fiber.. And lots of others..
Even nanotechnology is pretty much all about chemistry... Its the chemistry on quantum or atomic level
no nanotechnology is also a part of physics and maths it requires angle formulas and some pressure regarding concepts
Preparation and Applications of Nanomaterial for Drug Delivery
Hafiz Reply
Application of nanotechnology in medicine
has a lot of application modern world
what is variations in raman spectra for nanomaterials
Jyoti Reply
ya I also want to know the raman spectra
I only see partial conversation and what's the question here!
Crow Reply
what about nanotechnology for water purification
RAW Reply
please someone correct me if I'm wrong but I think one can use nanoparticles, specially silver nanoparticles for water treatment.
yes that's correct
I think
Nasa has use it in the 60's, copper as water purification in the moon travel.
nanocopper obvius
what is the stm
Brian Reply
is there industrial application of fullrenes. What is the method to prepare fullrene on large scale.?
industrial application...? mmm I think on the medical side as drug carrier, but you should go deeper on your research, I may be wrong
How we are making nano material?
what is a peer
What is meant by 'nano scale'?
What is STMs full form?
scanning tunneling microscope
how nano science is used for hydrophobicity
Do u think that Graphene and Fullrene fiber can be used to make Air Plane body structure the lightest and strongest. Rafiq
what is differents between GO and RGO?
what is simplest way to understand the applications of nano robots used to detect the cancer affected cell of human body.? How this robot is carried to required site of body cell.? what will be the carrier material and how can be detected that correct delivery of drug is done Rafiq
analytical skills graphene is prepared to kill any type viruses .
Any one who tell me about Preparation and application of Nanomaterial for drug Delivery
what is Nano technology ?
Bob Reply
write examples of Nano molecule?
The nanotechnology is as new science, to scale nanometric
nanotechnology is the study, desing, synthesis, manipulation and application of materials and functional systems through control of matter at nanoscale
Is there any normative that regulates the use of silver nanoparticles?
Damian Reply
what king of growth are you checking .?
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Source:  OpenStax, Econometrics for honors students. OpenStax CNX. Jul 20, 2010 Download for free at http://cnx.org/content/col11208/1.2
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