Polarized media and inflation expectations

Dr Orkun Saka has co-authored a new discussion paper for the Centre for Economic Policy Research with Selva Demiralp and Michael Weber, which studies how politically polarized television news shapes household inflation expectations in Turkey.

Abstract

"We study how politically polarized television news shapes household inflation expectations in Turkey. We combine new household panel data with transcript-based measures of channel-level inflation coverage during prime-time news and a large-scale randomized information experiment. Inflation coverage differs sharply across politically aligned channels, and viewers sort into outlets consistent with their political affiliations. Within-person estimates show that greater coverage on a respondent’s initially preferred channel leads to higher inflation expectations, with effects concentrated among viewers of politically neutral channels. Experimental evidence indicates that belief updating depends on prior anchoring as well as on source credibility and reveals the political costs of rising inflation expectations."