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Big Data Experiment Tests Central Banking Assumptions in Norway

Central bankers may do well to pay less attention to the bond market and their own forecasts than they do to newspaper articles. That’s the somewhat heretical finding of a new algorithm-based index being tested at Norway’s central bank in Oslo.

Researchers fed 26 years of news (or 459,745 news articles) from local business daily Dagens Naringsliv into a macroeconomic model to create a “newsy coincident index of business cycles” to help it gauge the state of the economy. Leif-Anders Thorsrud, a senior researcher at the bank who started the project while getting his Ph.D. at the Norwegian Business School, says the “hypothesis is quite simple:

Source: bloomberg.com
Author: Sveinung Sleire

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