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

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  • Vicente Esteve
  • Francisco Requena

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.

Suggested Citation

  • Vicente Esteve & Francisco Requena, 2006. "A Cointegration Analysis of Car Advertising and Sales Data in the Presence of Structural Change," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 13(1), pages 111-128.
  • Handle: RePEc:taf:ijecbs:v:13:y:2006:i:1:p:111-128
    DOI: 10.1080/13571510500520036
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    References listed on IDEAS

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    Cited by:

    1. A. Oznur Umit & H. Isil Alkan, 2016. "The Effects of Foreign Direct Investments and Economic Growth on Employment and Female Employment: A Time Series Analysis With Structural Breaks For Turkey," International Journal of Business and Economic Sciences Applied Research (IJBESAR), Eastern Macedonia and Thrace Institute of Technology (EMATTECH), Kavala, Greece, vol. 9(3), pages 43-49, December.
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    6. Umit BULUT, 2015. "The Interest Rate Corridor as a Macroprudential Tool to Mitigate Rapid Growth in Credits: Evidence from Turkey," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(605), W), pages 133-144, Winter.
    7. Cumhur ÞAHÝN & Hüseyin ALTAY, 2016. "Examination of the Relationship between Turkey’s Credit Default Swap (CDS) Points and Unemployment," Eurasian Business & Economics Journal, Eurasian Academy Of Sciences, vol. 4(4), pages 52-67, January.
    8. Kayhan, Selim & Adiguzel, Uğur & Bayat, Tayfur & Lebe, Fuat, 2010. "Causality Relationship between Real GDP and Electricity Consumption in Romania (2001-2010)," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 169-183, December.
    9. Umit Bulut, 2016. "How Far Ahead Does the Central Bank of the Republic of Turkey Look?," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 5(1), pages 99-111.
    10. repec:agr:journl:v:4(605):y:2015:i:4(605):p:135-146 is not listed on IDEAS
    11. Katircioğlu, Salih Turan & Taşpinar, Nigar, 2017. "Testing the moderating role of financial development in an environmental Kuznets curve: Empirical evidence from Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 68(P1), pages 572-586.
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    13. Fabrizio Germano, 2008. "On commercial media bias," Economics Working Papers 1133, Department of Economics and Business, Universitat Pompeu Fabra, revised Apr 2009.

    More about this item

    Keywords

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

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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