January 2023

Bad News, Good News: Coverage and Response Asymmetries

Luca Gambetti, Nicolò Maffei-Faccioli, and Sarah Zoi


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 significant 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, Agents' Information, Business Cycles, Asymmetry, Threshold-SVAR.

DOI: https://doi.org/10.17016/FEDS.2023.001

PDF: Full Paper

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Last Update: April 15, 2024