Advertising and GDP

Posted on 02/03/2011 by

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Do advertising expenditures as a percentage of GDP hold constant over time? Some empirical research shows that a rough relationship between these two variables is supported – advertising has contributed to around 2% of GDP over the last century, even as these expenditures have increased (in both nominal and real terms). Advertising can be thought of as a form of business investment, and as such it is an indicator of the confidence businesses have in the current economic environment.

Note: data is taken from the widely respected Robert Coen’s estimates, reproduced here since 1919. Analysis and graphing done by the author in Stata.

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