Marcel Garz

In a current working paper, I investigate whether news coverage about unemployment affects people’s perceptions of the state of the economy. I compile a German state-level data set, based on household surveys and information obtained from analyzing 35 newspapers. The data are used to separate media effects from real economic consequences, while exploiting two sources of exogenous variation. First, I consider psychologically important thresholds in the number of unemployed. The great news value of these “milestones”, which is not based on economic fundamentals, causes the media to report more about unemployment than usually. Second, I show that the amount of reports decreases when competing newsworthy events occur at the time of the release of the monthly unemployment statistics. Instrumental variable estimates indicate that a one standard deviation increase in coverage accounts for about a quarter of the average monthly change in the perception index. The findings help to understand (a) regional differences in economic sentiment and (b) incentives of politicians to manipulate economic statistics.

Posted: Nov. 16, 2016 (updated: Apr. 24, 2017)

In a current working paper, my co-author and I study the effect of news media on the probability of resignation from office of politicians being subject to criminal investigation. Using data on cases in which the political immunity of German representatives was lifted, we find that resignations are more common when the media covers the case intensely. The amounts of this news coverage, in turn, depend on the availability of other newsworthy, exogenous events. Therefore we instrument for coverage of liftings of immunity with the overall news pressure. We estimate the causal effect and find that a change from no coverage to the mean coverage increases the likelihood of resignation by 6.4 percentage points. The effect is likely driven by the crowding out of reports on politicians with the same ideology as the newspaper, rather than reports on representatives with different political leanings. There is no evidence that the reporting affects the chances of conviction. Posted: Nov. 27, 2015 (updated: May 11, 2017)