In the last decade, the analytical progress achieved in the New Keynesian literature has been remarkable. Many of the early assumptions have been relaxed, leading to medium-scale macroeconomic models that are now able to capture many features of real-world data. Nevertheless, modern-day New...

This paper provides new empirical evidence for quarterly U.S. aggregate advertising expenditures, showing that advertising has a well defined pattern over the Business Cycle. To understand this pattern we develop a general equilibrium model where targeted advertising increases the marginal...