News-Driven Inflation Expectations and Information Rigidities

Arbeitspapier

We investigate the role played by the media in the expectations formation process of households. Using a novel news-topic-based approach we show that news types the media choose to report on, e.g., fiscal policy, health, and politics, are good predictors of households' stated inflation expectations. In turn, in a noisy information model setting, augmented with a simple media channel, we document that the underlying time series properties of relevant news topics explain the time-varying information rigidity among households. As such, we not only provide a novel estimate showing the degree to which information rigidities among households varies across time, but also provide, using a large news corpus and machine learning algorithms, robust and new evidence highlighting the role of the media for understanding inflation expectations and information rigidities.

Object Details

• ISBN: 978-82-8379-083-2
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 5/2019

Classification and Topics

• Classification: Wirtschaft ; Bayesian Analysis: General ; Forecasting Models; Simulation Methods ; Search; Learning; Information and Knowledge; Communication; Belief; Unawareness ; Expectations; Speculations ; General Aggregative Models: Neoclassical ; Price Level; Inflation; Deflation ; Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Applications

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Larsen, Vegard Høghaug ; Thorsrud, Leif Anders ; Zhulanova, Julia
• Event: Veröffentlichung
• (who): Norges Bank
• (where): Oslo
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/210153
• Last update: 10.03.2025, 11:41 AM CET