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Advertising, Consumption and Economic Growth: An Empirical Investigation

Rehme, Günther and Weisser, Sara-Frederike (2007):
Advertising, Consumption and Economic Growth: An Empirical Investigation.
Darmstadt, In: Darmstadt Discussion Papers in Economics, [Online-Edition: http://tuprints.ulb.tu-darmstadt.de/4746],
[Report]

Abstract

It is sometimes argued that more advertising raises consumption which in turn stimulates output and so economic growth. We test this hypothesis using annual German data expressed in terms of GDP for the period 1950-2000. We find that advertising does not Granger-cause growth but Granger-causes consumption. Consumption, in turn, Granger-causes GDP growth. The data imply that the immediate impact of more advertising on consumption is positive. However, the long-run effect is negative. Further- more, the immediate impact of higher consumption on growth is negative. But the long-run effect is positive. These results raise interesting questions for standard theory, political debates and advertising practioners.

Item Type: Report
Erschienen: 2007
Creators: Rehme, Günther and Weisser, Sara-Frederike
Title: Advertising, Consumption and Economic Growth: An Empirical Investigation
Language: English
Abstract:

It is sometimes argued that more advertising raises consumption which in turn stimulates output and so economic growth. We test this hypothesis using annual German data expressed in terms of GDP for the period 1950-2000. We find that advertising does not Granger-cause growth but Granger-causes consumption. Consumption, in turn, Granger-causes GDP growth. The data imply that the immediate impact of more advertising on consumption is positive. However, the long-run effect is negative. Further- more, the immediate impact of higher consumption on growth is negative. But the long-run effect is positive. These results raise interesting questions for standard theory, political debates and advertising practioners.

Series Name: Darmstadt Discussion Papers in Economics
Volume: 178
Place of Publication: Darmstadt
Uncontrolled Keywords: Advertising, Consumption, Economic Growth
Divisions: 01 Department of Law and Economics
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > Economic Theory
Date Deposited: 31 Jan 2016 20:57
Official URL: http://tuprints.ulb.tu-darmstadt.de/4746
URN: urn:nbn:de:tuda-tuprints-47460
Additional Information:

JEL Classification: O4, M3, E2

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