Finance Webinar（2020-20)

Topic: `You Will:' A Macroeconomic Analysis of Digital Advertising

Speaker: Jeremy Greenwood, University of Pennsylvania

Time: Wednesday, 18 November,10:00-11:30AM Beijing Time

Location: Microsoft Teams Online Conference Room

Abstract:

A model is developed where traditional and digital advertising finance the provision of free media goods and affect price competition. The economy is not efficient. Media goods are under provided. Additionally, there is too much advertising when ads cannot be perfectly directed toward potential buyers. The tax-cum-subsidy policy that overcomes these inefficiencies is characterized. The model is calibrated to the U.S. economy. The movement toward digital advertising increases consumer welfare significantly and is disproportionately financed by better-off consumers. The welfare gain from the optimal tax-cum-subsidy policy is much smaller than the one realized by the introduction of digital advertising. This is a report on research in progress.

Introduction:

Jeremy Greenwood is Professor of Economics at the University of Pennsylvania. He is also a Fellow of the Econometric Society, a Research Associate at the National Bureau of Economic Research (NBER), and a Fellow of the Society for the Advancement of Economic Theory.

Professor Greenwood is a macroeconomist whose research has focused on how technological progress has affected, in a variety of ways, the economy. Specifically, he has analyzed how technological advance in the capital goods sector has been an engine of growth for the economy by making investment less expensive. He has studied the consequences of technological progress in financial markets, which allows investment to be directed toward the most profitable production opportunities in the economy, thereby increasing income and productivity. Related research explored how efficiency in both financial and patent markets affects technology adoption and growth. Other research examined the effect that skilled-biased technology advance, which favors skilled relative to unskilled labor, has had on income inequality and de-unionization. He has also investigated how improvements in household technologies have liberated women from working at home and allowed them to enter the labor market. Another hypothesis from this research is that technological progress in the home has led to a fall in marriage, a rise in divorce, and an increase in assortative mating. Other work has focused on social change as a result of improvements in contraception. Last, Professor Greenwood has estimated the worth of a personal computer for the average American.

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