Media reporting and business cycles: empirical evidence based on news data

Recent literature suggests that news shocks could be an important driver of economic cycles. In this article, we use a direct measure of news sentiment derived from media reports. This allows us to examine whether innovations in the reporting tone correlate with changes in the assessment and expecta...

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Published in:Empirical economics 2020-09, Vol.59 (3), p.1085-1105
Main Authors: Lamla, Michael J., Lein, Sarah M., Sturm, Jan-Egbert
Format: Article
Language:English
Subjects:
Business cycles
Conditioning
Econometrics
Economic models
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Finance
Industrial production
Innovations
Insurance
Management
Manufacturing
News
Statistics for Business
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cited_by cdi_FETCH-LOGICAL-c384t-c72c8dc2b634338db08995f8a32b43a6ab574eb3ff75fc6ebd9a3f8b72663c343
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description Recent literature suggests that news shocks could be an important driver of economic cycles. In this article, we use a direct measure of news sentiment derived from media reports. This allows us to examine whether innovations in the reporting tone correlate with changes in the assessment and expectations of the business situation as reported by firms in the German manufacturing sector. We find that innovations in news reporting affect business expectations, even when conditioning on the current business situation and industrial production. The dynamics of the empirical model confirm theoretical predictions that news innovations affect real variables such as production via changes in expectations. Looking at individual sectors within manufacturing, we find that macroeconomic news is at least as important for business expectations as sector-specific news. This is consistent with the existence of information complementarities across sectors.
doi_str_mv 10.1007/s00181-019-01713-5
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source EconLit s plnými texty; International Bibliography of the Social Sciences (IBSS); ABI/INFORM Global; Springer Nature; Business Source Ultimate (EBSCOHost)
subjects Business cycles
Conditioning
Econometrics
Economic models
Economic theory
Economic Theory/Quantitative Economics/Mathematical Methods
Economics
Economics and Finance
Finance
Industrial production
Innovations
Insurance
Management
Manufacturing
News
Statistics for Business
title Media reporting and business cycles: empirical evidence based on news data
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