Bad News, Good News: Coverage and Response Asymmetries

Luca Gambetti

No 2023-001, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: We study the dynamic link between economic news coverage and the macroeconomy. We construct two measures of media coverage of bad and good unemployment figures based on three major US newspapers. Using nonlinear time series techniques, we document three facts: (i) there is no signifi cant negativity bias in economic news coverage. The asymmetric responsiveness of newspapers' coverage to positive and negative unemployment shocks is entirely explained by the effects of these shocks on unemployment itself; (ii) consumption reacts to bad news, but not to good news; (iii) bad news is more informative to the agents and affects their expectations more than good news.

Keywords: news coverage; threshold-svar; agents' information; asymmetry; business cycles (search for similar items in EconPapers)
JEL-codes: C32 E32 (search for similar items in EconPapers)
Pages: 50 p.
Date: 2023-01
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Related works:
Working Paper: Bad News, Good News: Coverage and Response Asymmetries (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2023-01

DOI: 10.17016/FEDS.2023.001

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