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Taxing ads? A Bayesian-DSGE perspective

Author

Listed:
  • Delpeuch, Samuel
  • Turino, Francesco

Abstract

In 2019, €34 billion (1.4% of GDP) were spent in France on advertising and promotional marketing. To assess its aggregate effects and welfare implications, we develop a dynamic stochastic general equilibrium model where heterogeneous households exhibit endogenous preferences over differentiated goods, and firms strategically advertise. Bayesian estimation reveals that advertising generates a significant economic stimulus: in the long run, GDP rises by 3.85%, consumption by 4.21%, and investment by 2.59%. These effects stem from a work-and-spend mechanism, where exposure to brand marketing increases individuals’ willingness to work more in order to consume more. Counterfactual simulations show that taxes on commercial communication can improve welfare by mitigating this overworking effect. However, such policies entail modest long-run economic costs: in the worst-case scenario — with a 24.3% decline in advertising — GDP falls by only 0.56%, consumption by 0.61%, and investment by 0.36%.

Suggested Citation

  • Delpeuch, Samuel & Turino, Francesco, 2026. "Taxing ads? A Bayesian-DSGE perspective," Economic Modelling, Elsevier, vol. 154(C).
    • Handle: RePEc:eee:ecmode:v:154:y:2026:i:c:s0264999325003529
    DOI: 10.1016/j.econmod.2025.107357
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    Keywords

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    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • M30 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation

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