Orkun Saka (City, University of London) - Polarized Media Narratives and Inflation Expectations

BOFIT-seminaarit

BOFIT Seminar - Orkun Saka (City, University of London) - Polarized Media Narratives and Inflation Expectations

Co-author: Selva Demiralp (Koç University)

Abstract
We investigate the impact of media exposure on household inflation expectations in a high-inflation environment, focusing on the role of prime-time television news. Utilizing new micro data from Turkey with a panel dimension, we analyze how inflation-related narratives in television news influence public perception and formation of inflation expectations. In order to abstract from potential endogeneity in matching between individuals and TV channels, we focus on within-individual variation in expectations over time. Through textual analysis, we develop a sentiment index that quantifies the tone and content of inflation coverage across news networks reported as preferred by survey participants. Our findings reveal that media polarization reinforces pre-existing biases, leading to persistent divergences in inflation expectations among households. These results underscore the challenges of expectation management in a polarized media environment and highlight the need for credible, transparent monetary policy communication to counteract misinformation and better anchor inflation expectations. 

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