The role of media for consumers' inflation expectation formation

Lamla, Michael and Lein, Sarah M.. (2014) The role of media for consumers' inflation expectation formation. Journal of Economic Behavior and Organization, 106. pp. 62-77.

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The full-information rational expectations model is clearly rejected by the data. The expectation formation process has therefore important implications for macroeconomic outcomes. We examine how consumers react to information provided by the media, by taking into account that this information is imperfect. We show that information rigidities play a role empirically. Intensive news reporting improves the accuracy of consumers' inflation expectations, because they receive more information. However, this effect depends on the tone of the news. If news are badly toned, the effect reverts.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Makroökonomie (Lein)
UniBasel Contributors:Lein, Sarah M.
Item Type:Article, refereed
Article Subtype:Research Article
Publisher:Elsevier Ltd.
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:20 Jul 2018 11:27
Deposited On:20 Jul 2018 11:27

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