Exploring the Relationship Between Alcohol Excise Duty and Macroeconomic Indicators Using the Slovak Republic as an Example

The aim of this article is to elucidate the macroeconomic implications of developments in the alcoholic beverages market in the Slovak Republic, with particular emphasis on the effects of increasing excise duty rates on alcohol, consumption patterns, state budget revenues, production trends, and the foreign trade balance. This relationship is noteworthy because excise duties represent a stable source of revenue for the state budget and, simultaneously, exert measurable effects on the national economy. Although these taxes constitute a consistent component of state budget revenues, their relative contribution remains modest when compared to other fiscal instruments. Nonetheless, substitution effects between different categories of alcoholic commodities can be observed, complicating the effectiveness of such fiscal measures. Moreover, these duties serve as a policy instrument aimed at mitigating the adverse health consequences associated with the consumption of alcoholic beverages. And, therefore, at the same time they play a critical role in addressing the negative externalities arising from excessive alcohol consumption. Existing research does not sufficiently examine possible solutions to this problem, particularly with regard to the impact on key macroeconomic indicators such as consumption, production, and trade balance. Using the Slovak Republic as a case study, and national-level insight, the paper models the dependent relationships among the selected variables. The conclusions are derived from data spanning a twenty-three-year period and the corresponding empirical analysis and provides recommendations for practice. An important finding is that not every increase in excise duty rates necessarily results in higher state budget revenues.