Acta Univ. Agric. Silvic. Mendelianae Brun. 2011, 59(4), 97-104 | DOI: 10.11118/actaun201159040097

Advertising as a possible determinant of private consumption

Ladislava Grochová
Ústav ekonomie, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republika

Private consumption represents an important component of aggregate demand, i.e. private consumption becomes a significant aspect of GDP determination. The objective of this paper is to examine private consumption in terms of a potential short-run influence of advertising on private consumption as one of the factors that determine consumption. GDP (disposable personal income), interest rates, but also advertising may be considered as important factors that can accelerate the development or change the direction of development of private consumption. A debate on effects of these factors is carried on in the paper. Determinants of advertising expenses as well as potential influence of advertising on private consumption will be studied. This general theme will be specified under conditions of American economy and examined during a period of almost 80 years (1929-2008). The GLS method of estimation with application of Cochrane-Orcutt regression is used. Despite of lower statistical significance the model indicates that advertising expenses variable is not an important variable of private consumption at aggregate level on the contrary to disposable personal income and private savings.

Keywords: advertising, private consumption, private savings, personal disposable income, interest rates, GDP
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Results published in the paper are a part of the research project 6214648904 "on the theme 01"/Macroeconomic and microeconomic performance of the Czech economy and macroeconomic policy of the Czech government under condition of integrated European market/" were realised with the financial support of the Czech government.

Received: July 7, 2010; Published: May 29, 2014  Show citation

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Grochová, L. (2011). Advertising as a possible determinant of private consumption. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 59(4), 97-104. doi: 10.11118/actaun201159040097
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