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Causality between advertising and sales: new evidence from cointegration

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  • Junsoo Lee
  • B. S. Shin
  • In Chung

Abstract

It is puzzling that previous studies have found causality only in one direction from sales to advertising, but not the reverse. Employing the sequential causality tests of Toda Phillips (1993), the casual relationship between advertising and sales appears to run in both directions. This finding provides evidence that conventional causality tests can be misleading.

Suggested Citation

  • Junsoo Lee & B. S. Shin & In Chung, 1996. "Causality between advertising and sales: new evidence from cointegration," Applied Economics Letters, Taylor & Francis Journals, vol. 3(5), pages 299-301.
    • Handle: RePEc:taf:apeclt:v:3:y:1996:i:5:p:299-301
    DOI: 10.1080/135048596356393
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    Cited by:

    1. Madhobi Hossain & Tiasha Islam, 2019. "Effect of Advertising Expenses and Sales Incentives on Financial Performance: Dissecting the Cases of Two Market Leaders," Business and Economic Research, Macrothink Institute, vol. 9(1), pages 69-83, March.
    2. Zapata, Hector O. & Gil, Jose M., 1999. "Cointegration and causality in international agricultural economics research," Agricultural Economics, Blackwell, vol. 20(1), pages 1-9, January.
    3. Shalini Nath Tripathi & Dheeraj Misra & Masood Siddiqui, 2020. "Impact of Advertising Intensity on Market Risk of a Firm: A Study on the Indian Consumer Goods Sector," Global Business Review, International Management Institute, vol. 21(6), pages 1376-1386, December.
    4. Yan Lu & Debanjan Mitra & David Musto & Sugata Ray, 2020. "Can Brands Circumvent Marketing Regulations? Exploiting Umbrella Branding in Financial Markets," Marketing Science, INFORMS, vol. 39(1), pages 71-91, January.
    5. Rui Qi & David A Cárdenas & Xichen Mou & Simon Hudson, 2018. "The strategic value of advertising expenditures in the tourism and hospitality industry," Tourism Economics, , vol. 24(7), pages 872-888, November.
    6. Seth Stephens-Davidowitz & Hal Varian & Michael D. Smith, 2017. "Super returns to Super Bowl ads?," Quantitative Marketing and Economics (QME), Springer, vol. 15(1), pages 1-28, March.
    7. Sneha Sharma & Deepak Kapur, 2014. "Causality Relationship between Advertising Expenditure and Sales: A Study of Indian Service Sector," Management and Labour Studies, XLRI Jamshedpur, School of Business Management & Human Resources, vol. 39(3), pages 275-292, August.
    8. Wipo, 2013. "World Intellectual Property Report 2013 - Brands: Reputation and Image in the Global Marketplace," WIPO Economics & Statistics Series, World Intellectual Property Organization - Economics and Statistics Division, number 2013:944, April.
    9. Judith A. Giles, 2000. "Testing for Two-Step Granger Noncausality in Trivariate VAR Models," Econometrics Working Papers 0008, Department of Economics, University of Victoria.

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