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Economic Reality, Economic Media and Individuals' Expectations

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  • Kristoffer Persson

Abstract

This paper investigates the relationship between economic media sentiment and individuals' expetations and perceptions about economic conditions. We test if economic media sentiment Granger-causes individuals' expectations and opinions concerning economic conditions, controlling for macroeconomic variables. We develop a measure of economic media sentiment using a supervised machine learning method on a data set of Swedish economic media during the period 1993-2017. We classify the sentiment of 179,846 media items, stemming from 1,071 unique media outlets, and use the number of news items with positive and negative sentiment to construct a time series index of economic media sentiment. Our results show that this index Granger-causes individuals' perception of macroeconomic conditions. This indicates that the way the economic media selects and frames macroeconomic news matters for individuals' aggregate perception of macroeconomic reality.

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  • Kristoffer Persson, 2020. "Economic Reality, Economic Media and Individuals' Expectations," Papers 2007.13823, arXiv.org.
    • Handle: RePEc:arx:papers:2007.13823
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