inflation expectations , expectation formation , TV news , text analysis
Abstract:
This paper introduces a novel TV news index specifically designed to track coverage of rising inflation across major US TV channels: ABC, CBS, CNN, and Fox News. The index is generated daily and aggregated into a monthly measure. Using this index, we analyze the impact of TV news on inflation expectations based on both aggregated monthly and micro-level daily data. We find that only CNN and Fox coverage have significant effects on inflation expectations, and that responses are stronger among women, younger, poorer, and less-educated households. Moreover, the effects are larger when inflation is rising and the inflationary episode is prolonged. The micro data confirm these findings and reveal a partisan bias: Republicans respond more strongly to TV news than Democrats and the effects are larger for Fox than for CNN.
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