Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/271885 
Year of Publication: 
2023
Series/Report no.: 
CESifo Working Paper No. 10241
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
This paper investigates the effect of economic policy uncertainty (EPU) on gambling activity in China. Based on a theoretical model, we hypothesize that EPU increases the demand for hope which raises the willingness to pay for lottery tickets, resulting in higher lottery sales. We estimate a Panel Autoregressive Distributed Lag model with an Error-Correction form using data on lottery sales in Chinese provinces to estimate the short- and long-run effect of EPU on gambling. Our results suggest that EPU has a significant positive effect on gambling in the short run. In addition, we find that this positive effect is less persistent if the EPU proxy is based on economic policy reports in national newspapers than when the EPU measure is derived from local newspaper reports. This may be explained by the different thematic focus and the different degrees of media censorship of national and local newspapers.
Subjects: 
economic policy uncertainty
household behaviour under uncertainty
gambling behaviour
welfare lottery
China
JEL: 
D12
D81
D91
G41
L83
Document Type: 
Working Paper
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