Information warfare: analyzing COVID-19 news and its economic fallout in the US

By separating the 'good news' from the 'bad news,' we analyze the asymmetric effects of the infodemic and market emotions on the US weekly economic activity index (WEI) during COVID-19. The 'hot stove effect' and complicated, asymmetric, and time-varying coherence structures are present when we use the nonlinear autoregressive distributed lag and wavelet coherence methods. Our findings contrast existing literature based on the pandemic's symmetric impacts, which claim that the economy was negatively affected by non-pharmaceutical actions and that the severity of COVID-19 was the cause of the negative economic and financial shocks. We also discovered that while 'good news' has strong and favorable effects on WEI, 'bad news' has little to no impact. Furthermore, policymakers react to 'bad news' more slowly than they do to 'good news.' Therefore, to affect the representative agent's behavior and ensure an effective response to pandemic occurrences, policymakers should distinguish between deterioration (bad news) and improvements (good news) in shocks.