Impact of Cigarette Advertising on Aggregate Demand for Cigarettes in New Zealand

Summary The relationship between cigarette consumption and cigarette advertising was studied over the period 1973 to 1985. The data on cigarette consumption were drawn from government statistics. Expenditure on cigarette advertising included only that on print media advertising. Both quarterly and annual time series were examined and two different models were estimated. Results from the quarterly analysis suggested that advertising did effect overall consumption, with an elasticity of +0.07. The carry‐over effect of advertising lasted for approximately four quarters. Analysis of the annual series produced few meaningful results suggesting that use of the longer time period may mask significant relationships.