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  3. American Economic Review
  4. December 2021
  5. Sectoral Media Focus and Aggregate Fluctuations

American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Sectoral Media Focus and Aggregate Fluctuations

  • Ryan Chahrour
  • Kristoffer Nimark
  • Stefan Pitschner
American Economic Review
vol. 111, no. 12, December 2021
(pp. 3872–3922)
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Abstract

We formalize the editorial role of news media in a multisector economy and show that media can be an independent source of business cycle fluctuations, even when they report accurate information. Public reporting about a subset of sectoral developments that are newsworthy but unrepresentative causes firms across all sectors to hire too much or too little labor. We construct historical measures of US sectoral news coverage and use them to calibrate our model. Time-varying media focus generates demand-like fluctuations that are orthogonal to productivity, even in the absence of non-TFP shocks. Presented with historical sectoral productivity, the model reproduces the 2009 Great Recession.

Citation

Chahrour, Ryan, Kristoffer Nimark, and Stefan Pitschner. 2021. "Sectoral Media Focus and Aggregate Fluctuations." American Economic Review, 111 (12): 3872–3922. DOI: 10.1257/aer.20191895

Additional Materials

JEL Classification

  • D22 Firm Behavior: Empirical Analysis
  • D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
  • E32 Business Fluctuations; Cycles
  • L82 Entertainment; Media