Adstock revisited

Philip Hans Franses

Applied Economics, 2025, vol. 57, issue 8, 882-886

Abstract: The standard Adstock regression is problematic for at least two reasons. Statistical inference is cumbersome and there is a chance of a spurious relation between sales and advertising. This paper shows that reformulating the equation solves both problems, and the result is that a proper model for Adstock is an unrestricted Koyck model. Maximum Likelihood estimation gives the parameter estimates. An illustration to the illustrious monthly Lydia Pinkham data shows the merits of the method.

Date: 2025
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DOI: 10.1080/00036846.2024.2309463

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