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:
Author: Sveinung Sleire