The Relationship between Advertising and Consumption in India: An Analysis of Causality

Abstract

This article extends cointegration methodology to validate the evidence of soundness of advertising and consumption pattern of India during the period of 1980-2006. Augmented Dickey-Fuller test, Philips- Peron Test, Cointegration technique and Error Correction Models were employed to examine association between advertising and consumption. The analysis reveals that there is strong bi-directional relationship between advertising and consumption pattern in India.