No. 192: Which Macroeconomic News Matters for Price-Setting?

Year: 2025

Type: Working Paper

Abstract

We examine how macroeconomic news affects firms’ extensive-margin price-setting plans in a survey that we rolled out with randomized daily invitations. These plans predict future realized inflation. Using a high-frequency event study framework, we find that inflation and employment surprises imply significant and sizable revisions in firms’ pricing plans. There is a limited role for news about the trade balance, but no significant role for other commonly studied data releases, e.g., industrial production. We also study news coverage and agents’ news search behavior, finding that the intensive-margin response of media coverage and news search may partly drive our main results.

Publication Information

TRR 266 researchers

Davud Rostam-Afschar University of Mannheim

Prof. Dr. Davud Rostam-Afschar is academic director of the German Business Panel at the University of Mannheim. Previously, he was visiting researcher at UC Berkeley and Harvard University. He worked at the University of Hohenheim, the Freie Universität of Berlin, and as a consultant to the European Commission and the OECD. His research focuses on taxation and accounting, public economics, labor economics, and industrial economics.

External researchers

Lukas Hack

DOI

DOI Link

Cite this article as

Hack, L., & Rostam-Afschar, D. (2025). Which Macroeconomic News Matters for Price-Setting? TRR 266 Accounting for Transparency Working Paper Series No. 192. http://dx.doi.org/10.2139/ssrn.5275313

Related Projects

C01

German Business Panel

+ 10

Participating Institutions

TRR 266‘s main locations are Paderborn University (Coordinating University), HU Berlin, and University of Mannheim. All three locations have been centers for accounting and tax research for many years. They are joined by researchers from LMU Munich, Frankfurt School of Finance and Management, Goethe University Frankfurt, University of Cologne and Leibniz University Hannover who share the same research agenda.