Working Paper: CEPR ID: DP18349
Authors: Tim Besley; Thiemo Fetzer; Hannes Mueller
Abstract: This paper estimates the size of the media multiplier, a model-based measure of how far media coverage magnifies the economic response to shocks. We combine monthly aggregated and anonymized credit card activity data from 114 card issuing countries in 5 destination countries with a large corpus of news coverage in issuing countries reporting on violent events in the destinations. To define and quantify the media multiplier we estimate a model in which latent beliefs, shaped by either events or news coverage, drive card activity. According to the model, media coverage can more than triple the economic impact of an event. We show that within our sample, media reporting more than doubled the effect of events in Tunisia and speculate about the role of the media in driving international travel patterns. This concept can easily be expanded to other contexts and settings.
Keywords: news shocks; media; social media; behavioral economics; network spillovers
JEL Codes: O1; F5; D8; F1; L8
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| violent events (D74) | economic activity (E20) |
| media coverage (L82) | economic impact of violent events (H84) |
| media reporting (L82) | tourism spending (Z33) |
| negative news coverage (G14) | card activity (E40) |
| persistent negative news (E32) | economic losses (F69) |