News Media, Inflation, and Sentiment
AEA Papers and Proceedings
vol. 113,
May 2023
(pp. 172-76)
Abstract
We study the relationship between media portrayals of inflation and consumer sentiment. Using tools from natural language processing, we uncover two competing narratives in US news coverage of inflation: the first relates inflation to financial variables, while the second relates inflation to real variables. As inflation rose in 2021, media increasingly emphasized the real economy. Linking inflation news to social network data from Twitter, we find that exposure to articles emphasizing the connection between inflation and the real economy significantly reduces sentiment, particularly in periods of high inflation. Shifting media narratives may therefore have contributed to declining consumer sentiment in 2021.Citation
Macaulay, Alistair, and Wenting Song. 2023. "News Media, Inflation, and Sentiment." AEA Papers and Proceedings, 113: 172-76. DOI: 10.1257/pandp.20231117Additional Materials
JEL Classification
- C45 Neural Networks and Related Topics
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- E31 Price Level; Inflation; Deflation
- L82 Entertainment; Media