Bias in Economic News: The Reporting of the Nominal Exchange Rate Behaviour in Colombia

Since 1991, Colombia has had a market-determined Peso–US Dollar Nominal Exchange Rate (NER), after more than 20 years of controlled and multiple exchange rates. The behaviour (revaluation / devaluation) of the NER is constantly reported in the news, editorials, and op-eds of the major newspapers of the nation, with exceptional attention to revaluation. The uneven reporting of revaluation episodes can be explained by the existence of an interest group particularly affected by revaluation, looking to increase awareness and sympathy for help from public institutions. Using the number of news items and op-eds from a major Colombian newspaper, the over-reporting of revaluation episodes (in contrast to devaluation ones) is shown. Secondly, using statistical analysis of text upon the content of the news items, it is also shown that the words “devaluation” and “revaluation” are far apart in the distribution of words within the news; and the word “revaluation” is highly correlated with words related to: public institutions, exporters, and the need for assistance. Finally, the potential policy response to the media bias is explored.