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Abstract
This paper examines the evolution of alcoholic beverage sectors and the effects of tax policies
on these sectors as well as the alcohol beverage demand systems in Japan utilising data from
1948 to 2011. In tax policy analyses, liquor tax policies are found to have differential effects on
the production and consumption of different types of alcohol. Although sectoral growth and
general economic performance in terms of final consumption expenditure per capita are found
to be significant, with major positive effects, tax rates are found to have mixed effects,
depending on the type of alcohol considered. The analyses suggest that preferential tax rates
may be beneficial for boosting the sectoral performance of certain types of alcoholic
beverages. The results, based on double-log and demand system equation estimations for five
types of alcoholic beverages, suggest that all alcoholic beverages, except for shōchu, are
normal goods with positive expenditure elasticities. Although the results suggest that shōchu
may be the safest taxable subject in a Ramsey sense, the own-price elasticity estimates provide
less coherent results depending on the model applied.