Breaking Monetary Policy News: The Role of Mass Media Coverage of ECB Announcements for Public Inflation Expectations

Patrick Hirsch, Lars Feld and Ekkehard Köhler

No 10285, CESifo Working Paper Series from CESifo

Abstract: Using the variation in national television news of four major member states in the Eurozone, we find causal effects of coverage of high-frequency identified monetary policy announcements on households’ inflation expectations in an event study and a generalized Difference-in-Differences approach with stacked data. If a monetary policy decision receives news coverage, the adaptation of inflation expectations is stronger than without coverage. Second, we find that coverage of ‘delphic’ monetary policy announcements, which are primarily informational in nature, leads to an inverse adjustment, i.e., expansionary shocks lead to households lowering their inflation expectations, as opposed to coverage of a textbook, ‘odyssean’, monetary policy shock.

Keywords: inflation expectations; media coverage; transmission of monetary policy; quasi-experimental evidence (search for similar items in EconPapers)
JEL-codes: C83 D84 E31 E52 E58 (search for similar items in EconPapers)
Date: 2023
New Economics Papers: this item is included in nep-cba, nep-eec and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_10285

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