The role of media for inflation forecast disagreement of households and professional forecasters
Open access
Date
2009Type
- Working Paper
ETH Bibliography
yes
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Abstract
This paper investigates the effects of media coverage and macroeconomic conditions on inflation forecast disagreement of German households and professional forecasters. We adopt a Bayesian learning model in which media coverage of inflation affects forecast disagreement by influencing information sets as well as predictor choice. Our empirical results show that disagreement of households depends on the content of news stories (tone) but is unaffected by reporting intensity (volume) and by the heterogeneity of story content (information entropy). Disagreement of professionals does not depend on media coverage. With respect to the influence of macroeconomic variables we provide evidence that disagreement of households and professionals primarily depends on the current rate of inflation. Show more
Permanent link
https://doi.org/10.3929/ethz-a-005788384Publication status
publishedJournal / series
KOF Working PapersVolume
Publisher
KOF Swiss Economic Institute, ETH ZurichSubject
Bayesian; BAYESIAN THEORY (PROBABILITY THEORY); AUDIOVISUELLE MEDIEN UND MATERIALIEN (UNTERRICHT); BAYESSCHE THEORIE (WAHRSCHEINLICHKEITSRECHNUNG); FORECASTING BASED ON STATISTICS (MATHEMATICAL STATISTICS); Inflation expectations; MAKROÖKONOMISCHE MODELLE (OPERATIONS RESEARCH); AUDIOVISUAL MEDIA AND MATERIALS (INSTRUCTION); PROGNOSEN AUF STATISTISCHER BASIS (MATHEMATISCHE STATISTIK); INFLATION; Forecast disagreement; MACROECONOMIC MODELS (OPERATIONS RESEARCH); Media coverageOrganisational unit
03716 - Sturm, Jan-Egbert / Sturm, Jan-Egbert
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
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ETH Bibliography
yes
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