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Advertising, intangible assets, and unpriced entertainment

  • Leonard I. Nakamura
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    This paper addresses two aspects of advertising: its role in supporting entertainment and news, and its role as an investment. The author argues that in both roles advertising’s contribution to output is being undermeasured in the national income accounts. In some cases one unit of nominal advertising input should be counted as two units of real output. In rough orders of magnitude, he argues that it is plausible that two-thirds of advertising expenditure represents unmeasured contributions to output, and the level of real GDP should be increased accordingly.

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    File URL: http://www.philadelphiafed.org/research-and-data/publications/working-papers//2005/wp05-11.pdf
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    Paper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 05-11.

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    Date of creation: 2005
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    Handle: RePEc:fip:fedpwp:05-11
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    1. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    2. Nevo, Aviv, 1998. "Measuring Market Power in the Ready-To-Eat Cereal Industry," Food Marketing Policy Center Research Reports 037, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    3. Bloch, Harry, 1974. "Advertising and Profitability: A Reappraisal," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages 267-86, Part I, M.
    4. Peles, Yoram, 1971. "Rates of Amortization of Advertising Expenditures," Journal of Political Economy, University of Chicago Press, vol. 79(5), pages 1032-58, Sept.-Oct.
    5. Schmalensee, Richard., 1987. "Inter-industry studies of structure and performance," Working papers 1874-87., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    6. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    7. Avinash Dixit & Victor Norman, 1978. "Advertising and Welfare," Bell Journal of Economics, The RAND Corporation, vol. 9(1), pages 1-17, Spring.
    8. Weiss, Leonard W, 1969. "Advertising, Profits, and Corporate Taxes," The Review of Economics and Statistics, MIT Press, vol. 51(4), pages 421-30, November.
    9. Grossman, Gene M & Shapiro, Carl, 1984. "Informative Advertising with Differentiated Products," Review of Economic Studies, Wiley Blackwell, vol. 51(1), pages 63-81, January.
    10. Goettler, R., 1999. "Advertising Rates, Audience Composition, and Competition in the Network Television Industry," GSIA Working Papers 1999-28, Carnegie Mellon University, Tepper School of Business.
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