Advances in Management and Applied Economics

Nonlinear Effect of Business Cycle on Lottery Sales Stability

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• Abstract

  This paper constructs a panel smooth transition autoregression model to evaluate the impact of the U. S. business cycle on the stability of lottery sales. We find that the impact is nonlinear and time-varying, depending on the level of the leading indicator. The persistence of lottery sales locates between 0.7779 and 0.8539, implying that current lottery sales are influenced by about 15%-23% of current disturbance, and the stability of the lottery sales is relatively high. An increase in the leading indicator would lead to a higher persistence of lottery sales and then more stable lottery sales in the next period.

  JEL classification numbers: C23, L83, E32
  Keywords: Sales persistence, stability of lottery sales, panel smooth transition autoregression (PSTAR) model, lagged leading indicator