How Big is the Media Multiplier? Evidence from Dyadic News Data
This paper uses novel data to show how the media amplifies the economic impact of newsworthy events - the media multiplier. Specifically, we combine monthly aggregated and anonymized card activity data from 114 card issuing countries in Turkey, Egypt, Tunisia, Israel and Morocco with a large corpus of news coverage of violent events at these five destinations. To define and quantify the media multiplier we estimate a model in which latent beliefs, shaped by either events or news coverage, drive the behavior of heterogeneous agents. According to the model, card activity falls by 53 percent if a country is regarded as dangerous by all agents - more than half of this effect is due to the media multiplier (http://www.econ.jku.at/t3/veranstaltungen/research_seminar/papers/fetzer.pdf).
Thiemo Fetzer is an Associate Professor in the Economics Department at the University of Warwick and a Visiting Fellow at the London School of Economics.
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