News and Sectoral Comovement

Michael Lamla, Sarah Lein and Jan-Egbert Sturm

No 07-183, KOF Working papers from KOF Swiss Economic Institute, ETH Zurich

Abstract: This paper tests the existence of strategic information complementarities as a source of sectoral comovement. A theoretical model derived in Veldkamp and Wolfers (2007) explains sectoral comovement by the assumption that firms rely too much on aggregate information to make output decisions. We find empirical support for this hypothesis: news on aggregate developments, on average, affect firm's production plans significantly more than news on sector-specific developments. This result is based on a rich dataset on firm survey and media releases for Germany comprising 01/1999-07/2006.

Keywords: Media reporting; News; Expectation driven business cycles; Information complementarities; Sectoral comovement (search for similar items in EconPapers)
Pages: 30 pages
Date: 2007-12
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:kof:wpskof:07-183

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