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Information rigidities, inflation perceptions, and the media: Lessons from the euro cash changeover

Lamla, MJ and Lein, SM (2015) 'Information rigidities, inflation perceptions, and the media: Lessons from the euro cash changeover.' Economic Inquiry, 53 (1). 9 - 22. ISSN 0095-2583

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Abstract

© 2014 Western Economic Association International. The objective of theoretical models of information rigidities is to capture the fact that people are constrained in their ability to acquire and process all available information. Given that most people obtain their information about the economy from the media, press coverage of the economy may exert an influence on peoples' attitudes. This paper tests for this influence by examining consumers' inflation perceptions in the aftermath of the euro cash changeover, which serves as a natural experiment. Using a new data set, that quantifies the intensity and tone of media reports, we document that media reporting has had a statistically significant and economically meaningful impact on inflation perceptions and contributed to their sharp rise in the aftermath of the euro cash changeover and to the divergence between inflation perceptions and actual inflation rates. (JEL E53, D83).

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 11:33
Last Modified: 11 Nov 2019 22:15
URI: http://repository.essex.ac.uk/id/eprint/11207

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