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Sectoral Media Focus and Aggregate Fluctuations

Resource type
Authors/contributors
Title
Sectoral Media Focus and Aggregate Fluctuations
Abstract
We formalize the editorial role of news media in a multisector economy and show that media can be an independent source of business cycle fluctuations, even when they report accurate information. Public reporting about a subset of sectoral developments that are newsworthy but unrepresentative causes firms across all sectors to hire too much or too little labor. We construct historical measures of US sectoral news coverage and use them to calibrate our model. Time-varying media focus generates demand-like fluctuations that are orthogonal to productivity, even in the absence of non-TFP shocks. Presented with historical sectoral productivity, the model reproduces the 2009 Great Recession.
Publication
American Economic Review
Volume
111
Issue
12
Pages
3872-3922
Date
2021-12
Citation
Chahrour, R., Nimark, K., & Pitschner, S. (2021). Sectoral Media Focus and Aggregate Fluctuations. American Economic Review, 111, 3872–3922.
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