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The Impact Of Advertising On Aggregate Consumption: The Case Of Italy

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  • Luigi Marattin

Abstract

One of the last assumptions of neoclassical economics that has not yet been fully challenged is the exogeneity of consumers'preferences. In this paper we attempt to verify and measure the effects of advertising on consumers'demand. We do so by carrying out an econometric analysis, relying on a rather simple econometric model on Italian economy, using quarterly data from 1980 to 2000. We build an ADL model with Koyck transformation and different (and advertising-specific) geometrical rates of decline, and we test both the flow-form and the stock form of advertising. Our conclusions show that in the period under consideration advertising had a positive and significant effect on consumption, with short term and long term elasticities equal respectively to 0.034 and 0.16.

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Bibliographic Info

Article provided by Spiru Haret University, Faculty of Financial Management and Accounting Craiova in its journal Journal of Applied Economic Sciences.

Volume (Year): 3 (2008)
Issue (Month): 3(5)_Fall2008 ()
Pages: 223-231

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Handle: RePEc:ush:jaessh:v:3:y:2008:i:3(5)_fall2008:p:223-231

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Web page: http://www2.spiruharet.ro/facultati/facultate.php?id=14
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Related research

Keywords: ADL models; advertising; Koyck transformation;

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Cited by:
  1. Fabio FIORILLO & Marco LILLA & Stefano STAFFOLANI, 2013. "Advertising Has Got You On The Run. Well-Being, Consumption and Leisure in a GE model," Working Papers 389, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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