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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 utility of the advertised good. Advertising intensity is endogenously determined by profit maximizing firms. We embed this assumption into an otherwise standard model of the business cycle with monopolisticdoi:10.2139/ssrn.1371174 fatcat:ixswxc564zhrvn7lqaafbrctia