METHODS: This paper use tobacco data and Macroeconomics Indicators from Euromonitor International and World Bank Data. We extend linear regression models by controlling both the serial correlation and endogeneity bias problems. We also observe the properties in the ARMA(2,2) data generating process.
RESULTS: We document that tobacco tends to affect the USA's future economy but not Indonesia. In our robustness check, we conduct a SUR analysis to control the contemporaneous correlations among Asian markets. We further document that tobacco variables tend not to affect the economy in the Asian markets.
CONCLUSION: Our results show that the contribution of tobacco commodity to the economy is overstated. Therefore, the comprehensive and massive tobacco control implementations should be undertaken hence is relevant to put into actions.