IDEAS home Printed from https://ideas.repec.org/p/red/sed016/1034.html
   My bibliography  Save this paper

Sectoral Media Focus and Aggregate Fluctuations

Author

Listed:
  • Ryan Chahrour

    (Boston College)

  • Kristoffer Nimark

    (Cornell University)

Abstract

In this paper, we formalize the monitoring and editorial functions of news media within a multi-sector macroeconomic model. Each sector is subject to sector-specific productivity shocks, which are perfectly observed by firms in that sector. In addition to their local information, firms also learn from the news media about the developments in those sectors that the media choose to cover. Which sectors news media report about is a deterministic function of the cross-section of sectoral productivity shocks and the network structure of production. When the most newsworthy sectors are unrepresentative of the rest of the economy, the public nature of media reporting generates prediction errors about economic conditions that are correlated across sectors. Sectoral media focus can thus cause fluctuations in aggregate output that are caused by undue optimism or pessimism shared by all sectors in the economy. Because what news media report and how firms' resulting posteriors differ from the true state of the world are deterministic functions of the cross-section of productivity shocks, the theory makes tight predictions about when and why firms will be unduly optimistic or pessimistic.

Suggested Citation

  • Ryan Chahrour & Kristoffer Nimark, 2016. "Sectoral Media Focus and Aggregate Fluctuations," 2016 Meeting Papers 1034, Society for Economic Dynamics.
  • Handle: RePEc:red:sed016:1034
    as

    Download full text from publisher

    File URL: https://economicdynamics.org/meetpapers/2016/paper_1034.pdf
    Download Restriction: no

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed016:1034. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann). General contact details of provider: http://edirc.repec.org/data/sedddea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.