Hanno Hilbig, 2022-2023 CSDP Fellow, Princeton University. The Role of Media in Hard Times

Dec 8, 2022, 12:00 pm1:20 pm
Faculty, fellows, and graduate students only



Event Description


How does local media shape policy responses to economic crises? Amidst a shift
away from traditional outlets, prior work documents how changes in the media landscape
a ect constituents' attitudes and behavior, but we know less about the downstream
consequences for tangible policy outcomes. In this paper, I present new and
comprehensive evidence on the relationship between local government responses to economic
crises and the availability of local news. Theoretically, local news may (i) increase
accountability, increasing congruence between voter preferences and policy outcomes,
but also (ii) change constituents' preferences by exposing them to information on the
negative repercussions of a crisis. To study these mechanisms, I compile a fourteen-year
panel of key fiscal policy outcomes for 2,193 German municipalities, focusing on
the critical areas of business and property taxation. Using a dfference-in-dfferences
design, I first show that local governments in areas more strongly affected by the crisis
respond by enacting tax cuts for local businesses. I then utilize overlapping media
coverage areas to obtain exogenous variation in newspaper availability, demonstrating
that business tax cuts are largest in areas with a greater local media presence. Finally,
I present survey evidence that is consistent with a mechanism where newspaper reporting
on the crisis induces economic anxiety, increasing popular demands for responses
that benefit the struggling local economy. These results have implications for research
on the interplay between media and policy outcomes, as well as for work on democratic
accountability more broadly.

Center for the Study of Democratic Politics (CSDP)