TITLE:
Advertisement Spending and Income: An Aggregative Analysis
AUTHORS:
Baiding Hu, Amal Sanyal
KEYWORDS:
Advertisement Spending, GDP, Granger Causality, Cointegration
JOURNAL NAME:
Theoretical Economics Letters,
Vol.6 No.2,
April
29,
2016
ABSTRACT: Existing studies tend to investigate cross-sectional
relations between GDP and advertisement at the firm or industry level. The
present study focuses on the long-run relation between GDP and aggregate
advertisement spending using United States data for the period 1900-2007. Granger causality tests
indicate the temporal precedence of GDP. A cointegration analysis shows that,
as GDP increases, it causes advertisement spending to increase at a rate faster than
its own growth. Faster growth relative to GDP is accompanied with a negative
autonomous trend of advertisement spending. This trend appears consistent with
the continuous technical progress in advertisement.