Economic News and Household Decisions

Contemporary Economics, Vol. 12, No. 1, pp. 57-68, 2018

12 Pages Posted: 14 Jul 2018

See all articles by Stephan Vinokurov

Stephan Vinokurov

Saint Petersburg State University of Economics and Finance

Anna Medved

St.-Petersburg State University of Economics

Larisa Mierin

Saint-Petersburg State University of Economics

Date Written: March 31, 2018

Abstract

This paper is devoted to the role of information context in the dynamics of consumption/savings decisions. The deviations from the traditional model of rational expectations are investigated, and the hypotheses of the Ā«rational inattentionĀ» are tested. The basis for the study was a selection of news from the major Russian TV channels for 2006-2016. This news available to ordinary households in Russia was analyzed. News was defined as negative or positive with special program tools of sentiment analysis. It was found that increased uncertainty (the spread of positive and negative news) leads to the choice of consumption to the detriment of savings, which then reduces the investment base of the economy. The authors analyze the connection of the tonality of news and its changes with the real business cycle. The authors found that the information cycle with some lag correlated with the cycle in consumption/savings decisions in the Russian Federation. The authors conclude that the concept of rational inattention is more acceptable for this case. Based on the study, recommendations are offered for adjusting public policy.

Keywords: cycles, information imperfectness, bounded rationality

JEL Classification: E21

Suggested Citation

Vinokurov, Stephan and Medved, Anna and Mierin, Larisa, Economic News and Household Decisions (March 31, 2018). Contemporary Economics, Vol. 12, No. 1, pp. 57-68, 2018. Available at SSRN: https://ssrn.com/abstract=3201058

Stephan Vinokurov

Saint Petersburg State University of Economics and Finance ( email )

Sadovaya st. 21
Saint-Petersburg, 191023
Russia

Anna Medved (Contact Author)

St.-Petersburg State University of Economics ( email )

Sadovaya 21
Glavnaya 31-2, 208
St.-Petersburg, RI St.-Petersburg 191023
Russia

Larisa Mierin

Saint-Petersburg State University of Economics ( email )

21, Sadovaya Street
Russian Federation
St.Petersburg, 191023
Russia

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