Impacts of mass media coverage of the economy during normal times and recessions on the Index of Consumer Confidence using time series analysis and Granger causal analysis

摘要

The level of consumer sentiment influences decision making of policy makers, and therefore it is important to examine if media have powerful impacts on consumer sentiment. Based on the theories of business cycles and second-level agenda-setting, this study applies Granger causal analysis and time series analysis to explore the causal relationships among economic reporting by media, consumer sentiment and the real state of the economy embodied in Business Week, the Index of Consumer Confidence (CCI) and the Standard \u26 Poor\u27s 500 (S\u26P 500). The results indicate that interpretation by media have only limited effects on the level of consumer sentiment in general, and the real state of the economy plays a more important role in shaping consumer sentiment. However, during recessions and times of economic slowdowns, media have a more powerful effect on consumer sentiment though its impact is still smaller than the real state of the economy.