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Causality Among Sales,Advertising and Prices: New Evidence from a Multivariate Cointegrated System

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  • Francisco F. R. Ramos

    (Faculty of Economics University of Porto Portugal)

Abstract

The main purpose of this paper is to discern the dynamic causal relationships (in the Granger (temporal) sense) among sales, advertising and prices in the context of the Portuguese car market. The present research (based on multiple cointegration tests preceded by various unit root or non-stationarity tests) is one of the first attempts at putting the sales-marketing mix analysis within a multivariate cointegrated system. The results, based on a three-step procedure (cointegration, VECM and VDCs) confirm that a strong one-way relationship (A->S, A->P) between advertising and sales (prices) is complemented by a feedback relationship (S P) between sales and prices.

Suggested Citation

  • Francisco F. R. Ramos, 1996. "Causality Among Sales,Advertising and Prices: New Evidence from a Multivariate Cointegrated System," Econometrics 9612004, University Library of Munich, Germany.
    • Handle: RePEc:wpa:wuwpem:9612004
    Note: Type of Document - Winword 2.0; prepared on IBM PC ; to print on HP; pages: 12
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    References listed on IDEAS

    as
    1. Baghestani, Hamid, 1991. "Cointegration Analysis of the Advertising-Sales Relationship," Journal of Industrial Economics, Wiley Blackwell, vol. 39(6), pages 671-681, December.
    2. Ashley, R & Granger, C W J & Schmalensee, R, 1980. "Advertising and Aggregate Consumption: An Analysis of Causality," Econometrica, Econometric Society, vol. 48(5), pages 1149-1167, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Car market; cointegration analysis; Granger-causality; marketing-mix; variance decompositions; vector error-correction model;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M37 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Advertising

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