Advertising and aggregate consumption in Italy: 1981-1993

Abstract

The paper focuses on the relationship between advertising and aggregate consumption in Italy during the '80s and the first half of the '90s. Using the Engle and Granger approach for the cointegration analysis and the Granger-Sims test for causality we find non-causality in the long-run but short-run causality from consumption to advertising. This implies that advertising is pro-cyclical, and that the strong growth of advertising in Italy during the Eighties finds its roots in the rise of oligopolistic competition and in the structural change of the media industry.