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A Cointegration Analysis of Car Advertising and Sales Data in the Presence of Structural Change

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Author Info
Vicente Esteve
Francisco Requena

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Abstract

This paper examines whether there is a long-run stable equilibrium relationship between advertising and sales across the market segments of the UK car industry over the period 1971--2001. In order to achieve this goal, we allow for structural breaks in the series using cointegration techniques. The results show the existence of long-run equilibrium relationships in all six market segments, although in four of them the relationship is not stable. In general, one structural change is detected in the late 1970s and another in the early 1990s, coinciding with two economic recessions. When we do not account for structural changes, the estimated long-run elasticities of advertising on sales are seen to be substantially downwardly biased. Finally, a noticeable increase is observed in long-run elasticities in most car market segments during the nineties with respect to previous decades.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal International Journal of the Economics of Business.

Volume (Year): 13 (2006)
Issue (Month): 1 (February)
Pages: 111-128
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Handle: RePEc:taf:ijecbs:v:13:y:2006:i:1:p:111-128

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Related research
Keywords: Advertising; Sales; Cointegration; Structural Break; Car Industry; JEL Classifications: C12; C22; L10;

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References listed on IDEAS
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Fabrizio Germano, 2008. "On Commercial Media Bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009. [Downloadable!]
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