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The role of media for consumers' inflation expectation formation

Lamla, MJ and Lein, SM (2014) 'The role of media for consumers' inflation expectation formation.' Journal of Economic Behavior and Organization, 106. 62 - 77. ISSN 0167-2681

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Abstract

The full-information rational expectations model is clearly rejected by the data. The expectation formation process has therefore important implications for macroeconomic outcomes. We examine how consumers react to information provided by the media, by taking into account that this information is imperfect. We show that information rigidities play a role empirically. Intensive news reporting improves the accuracy of consumers' inflation expectations, because they receive more information. However, this effect depends on the tone of the news. If news are badly toned, the effect reverts. © 2014.

Item Type: Article
Subjects: H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Essex Business School
Depositing User: Users 161 not found.
Date Deposited: 11 Nov 2014 17:04
Last Modified: 11 Nov 2019 22:15
URI: http://repository.essex.ac.uk/id/eprint/11205

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