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Title:The role of media for inflation forecast disagreement of households and professional forecasters PDF Logo
Authors:Maag, Thomas
Lamla, Michael J.
Issue Date:2009
Series/Report no.:KOF working papers // KOF Swiss Economic Institute, ETH Zurich 223
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.
Subjects:forecast disagreement
inflation expectations
media coverage
Bayesian learning
JEL:E31
E37
D83
Persistent Identifier of the first edition:doi:10.3929/ethz-a-005788384
Document Type:Working Paper
Appears in Collections:KOF Working Papers, KOF Konjunkturforschungsstelle, ETH Zürich

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