Media reporting and business cycles: empirical evidence based on news data

  • Michael J. Lamla
  • Sarah M. LeinEmail author
  • Jan-Egbert Sturm


Recent literature suggests that news shocks could be an important driver of economic cycles. In this article, we use a direct measure of news sentiment derived from media reports. This allows us to examine whether innovations in the reporting tone correlate with changes in the assessment and expectations of the business situation as reported by firms in the German manufacturing sector. We find that innovations in news reporting affect business expectations, even when conditioning on the current business situation and industrial production. The dynamics of the empirical model confirm theoretical predictions that news innovations affect real variables such as production via changes in expectations. Looking at individual sectors within manufacturing, we find that macroeconomic news is at least as important for business expectations as sector-specific news. This is consistent with the existence of information complementarities across sectors.


Media reporting News-driven business cycles Sectoral information complementarities 

JEL Classification

E32 D82 



We thank an anonymous referee, Laura Veldkamp and the participants of the seminar at the University of Zurich, the European Economic Association Meeting, the Meeting of the Swiss Society of Economics and Statistics and German Economic Association Meeting and the CESifo Area Conference on Macro, Money and International Finance for helpful comments. An earlier version circulated under the title News and Sectoral Comovement.


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Copyright information

© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  • Michael J. Lamla
    • 1
    • 2
  • Sarah M. Lein
    • 2
    • 3
    Email author
  • Jan-Egbert Sturm
    • 2
    • 4
  1. 1.University of EssexColchesterUK
  2. 2.KOF ETH ZurichZurichSwitzerland
  3. 3.University of BaselBaselSwitzerland
  4. 4.CESIfoMunichGermany

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