Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/302555 
Year of Publication: 
2024
Series/Report no.: 
Bank of Finland Research Discussion Papers No. 8/2024
Publisher: 
Bank of Finland, Helsinki
Abstract: 
This study investigates the role of media tone on inflation expectations. Examining the relationships between news and the inflation expectations of various U.S demographic groupings, we find that traditional news influences older cohorts, while social media news align more closely with the expectations of younger and more educated groups. Interestingly, social media correspond more closely than traditional news with the expectations of professional forecasters. Our analysis shows that media influences can persist for longer than a year, highlighting the importance of historical inflation data and the gradual adaptation of new information. Additionally, we find that separate media tones for specific news topics such as "Inflation & Fed" and "Healthcare Costs" resonate differently across demographic groups. These insights highlight the nuanced role of media in shaping inflation expectations across demographic segments.
Subjects: 
Inflation Expectations
Household Heterogeneity
Media Tone
Local Projection
Language Model
Forecasting
JEL: 
E3
E31
E32
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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