Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/32093
Authors: 
Rehme, Günther
Weisser, Sara-Frederike
Year of Publication: 
2007
Series/Report no.: 
Darmstadt discussion papers in economics 178
Abstract: 
It is sometimes argued that more advertising raises consumption which in turn stimulates output and so economic growth. We test this hypothe- sis 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.
Subjects: 
Advertising
Consumption
Economic Growth
JEL: 
O4
M3
E2
Document Type: 
Working Paper

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