The role of media for inflation forecast disagreement of households and professional forecasters

Thomas Maag () and Michael Lamla

No 09-223, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

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.

Keywords: Forecast disagreement; Inflation expectations; Media coverage; Bayesian (search for similar items in EconPapers)
Pages: 36 pages
Date: 2009-01
New Economics Papers: this item is included in nep-cba, nep-cul, nep-for, nep-mac and nep-mon
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Citations: View citations in EconPapers (22)

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http://dx.doi.org/10.3929/ethz-a-005788384 (application/pdf)

Related works:
Journal Article: The Role of Media for Inflation Forecast Disagreement of Households and Professional Forecasters (2012)
Journal Article: The Role of Media for Inflation Forecast Disagreement of Households and Professional Forecasters (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:09-223

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