Modelling with flexibility through the business cycle: using a panel smooth transition model to test for the lipstick effect
Li, Zhen and Dorfman test whether lipstick sales rise in downturns, a pattern they note had not been confirmed empirically. They use American weekly retail scanner data for a decade that spans the 2007 to 2009 recession and fit a panel smooth transition regression, which lets demand coefficients shift smoothly with economic conditions. They report that the income elasticity of lipstick demand fell sharply during the recession and recovered gradually afterwards, and present this as the first empirical confirmation of the lipstick effect.
Li, Zhen and Dorfman test whether lipstick sales rise in downturns, a pattern they note had not been confirmed empirically. They use American weekly retail scanner data for a decade that spans the 2007 to 2009 recession and fit a panel smooth transition regression, which lets demand coefficients shift smoothly with economic conditions. They report that the income elasticity of lipstick demand fell sharply during the recession and recovered gradually afterwards, and present this as the first empirical confirmation of the lipstick effect.
Written from the abstract, Applied Economics via the RePEc record.
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Li, W., Zhen, C., & Dorfman, J. H. (2020). Modelling with flexibility through the business cycle: using a panel smooth transition model to test for the lipstick effect. Applied Economics, 52(25), 2694-2704. doi:10.1080/00036846.2019.1693701 https://doi.org/10.1080/00036846.2019.1693701