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The Effect of Advertising on Economic Growth in the USA from a New Methodological Perspective

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  • Artem A. Eremin

Abstract

The present research will introduce a new methodology of analyzing advertising’s impact on GDP. By juxtaposing the discrepancies in the GDP measurement with the advertising expenditures in the US, the paper will show that there is a significant relationship between GDP’s growth and adspend. Granger test of causality will establish the causality running from advertising to GDP. Based on that, it will be argued that advertising should be treated as an investment in both accounting and calculation of GDP by expenditure method.

Suggested Citation

  • Artem A. Eremin, 2014. "The Effect of Advertising on Economic Growth in the USA from a New Methodological Perspective," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 4, pages 3-14.
    • Handle: RePEc:bas:econst:y:2014:i:4:p:3-14
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    References listed on IDEAS

    as
    1. Toda, Hiro Y & Phillips, Peter C B, 1993. "Vector Autoregressions and Causality," Econometrica, Econometric Society, vol. 61(6), pages 1367-1393, November.
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    3. Harald Edquist, 2011. "CAN INVESTMENT IN INTANGIBLES EXPLAIN THE SWEDISH PRODUCTIVITY BOOM IN THE 1990s?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 57(4), pages 658-682, December.
    4. Stephen Lacy & Ghee-Young Noh, 1997. "Theory, Economics, Measurement, and the Principle of Relative Constancy," Journal of Media Economics, Taylor & Francis Journals, vol. 10(3), pages 3-16.
    5. John Dimmick, 1997. "The Theory of the Niche and Spending on Mass media: The Case of the "Video Revolution"," Journal of Media Economics, Taylor & Francis Journals, vol. 10(3), pages 33-43.
    6. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    7. Ashley, R & Granger, C W J & Schmalensee, R, 1980. "Advertising and Aggregate Consumption: An Analysis of Causality," Econometrica, Econometric Society, vol. 48(5), pages 1149-1167, July.
    8. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-438, July.
    9. Richard van der Wurff & Piet Bakker & Robert Picard, 2008. "Economic Growth and Advertising Expenditures in Different Media in Different Countries," Journal of Media Economics, Taylor & Francis Journals, vol. 21(1), pages 28-52.
    10. Robert Picard, 2001. "Effects of Recessions on Advertising Expenditures: An Exploratory Study of Economic Downturns in Nine Developed Nations," Journal of Media Economics, Taylor & Francis Journals, vol. 14(1), pages 1-14.
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    More about this item

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • C18 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Methodolical Issues: General

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