We provide empirical evidence on how news about financial intermediaries' net worth impacts the aggregate economy, using a high-frequency identification strategy. We measure "financial shocks" based on the idiosyncratic stock-price changes of large U.S. intermediaries in a narrow window around their earnings announcements. We document significant effects of these shocks on the stock price and borrowing costs of nonfinancial firms, as well as on macroeconomic variables. The effects are more pronounced for firms with low credit ratings and when the aggregate net worth of intermediaries is low.

This paper provides empirical evidence of the importance of firm attention to macroeconomic dynamics. We construct a text-based measure of attention to macroeconomic news and document that attention is polarized across firms and countercyclical. Differences in attention lead to asymmetric responses to monetary policy: expansionary monetary shocks raise market values of attentive firms more than those of inattentive firms, and contractionary shocks lower values of attentive firms by less. Attention also mitigates the effects of macroeconomic uncertainty on firm performance. In a quantitative rational inattention model that is calibrated with this new text-based measure, inattention drives monetary non-neutrality. As average attention varies over the business cycle, so does the efficacy of monetary policy.

We study the relationship between media portrayals of inflation and consumer sentiment. Using tools from natural language processing, we uncover two competing narratives in US news coverage of inflation: the first relates inflation to financial variables, while the second relates inflation to real variables. As inflation rose in 2021, media increasingly emphasized the real economy. Linking inflation news to social network data from Twitter, we find that exposure to articles emphasizing the connection between inflation and the real economy significantly reduces sentiment, particularly in periods of high inflation. Shifting media narratives may therefore have contributed to declining consumer sentiment in 2021.

We study the transmission of conventional monetary policy in China, focusing on the interaction between monetary and fiscal policy given the unique institutional set-up for macroeconomic policy making. Our results suggest some progress but also continued difficulties in the transmission of monetary policy. Similar to recent studies, we find evidence of monetary policy pass-through to interest rates. However, the impact of monetary policy measures that are not coordinated with fiscal policy is significantly weaker than that of coordinated measures. This suggests the need for further improvements to the interest-rate based framework.

This paper studies how the distribution of information supply by the news media affects the macroeconomy. We document three connected facts on media's reporting of firm news. First, media coverage is highly concentrated, particularly among the largest firms. Second, firms' equity financing and investment rise after media coverage. Third, these equity and investment responses are largest among small, rarely-covered firms. We then develop a heterogeneous-firm model with a media sector that matches these facts. Asymmetric information between firms and investors leads to financial frictions that constrain firms' financing and investment. Media's role in alleviating information frictions is limited by its focus on large and financially unconstrained firms. Re-allocating news coverage, or allowing firms to buy coverage from outlets in a competitive market, leads to substantial increases in aggregate investment and output. The aggregate effects of media coverage therefore depend crucially on how that coverage is allocated.

We study the distribution of political speech across U.S. firms. We develop a measure of political engagement based on firms' communications (earning calls, regulatory filings, and social media), by training a large language model to identify statements that contain political opinions. Using these data, we document five facts about firms' political engagement. (1) Political engagement is rare among firms. (2) Political engagement is concentrated among large firms. (3) Firms tend to specialize in specific topics and outlets. (4) Large firms tend to engage in a wider set of topics and outlets. (5) The 2020 surge in firms' political engagement was associated with an increase in the engagement of medium-sized firms and a change in the mix of political topics.

We study the empirical importance of narratives by linking narratives in newspapers to the sentiment of social media users. First, we model narratives as directed acyclic graphs and show how exposure to different narratives can affect expectations in an otherwise-standard macroeconomic model. We then measure competing narratives in news media reports on the US yield curve inversion in 2019, using techniques in natural language processing. Linking these narratives to data from Twitter, we show that exposure to the narrative of an imminent recession is associated with a more pessimistic sentiment, while exposure to a more neutral narrative implies no such change in sentiment. In addition, we find that narratives are contagious: their effects spread in the social network, even to those who are indirectly exposed.