Type of uncertainty matters for modelling – Norges Bank paper

Norges Bank. Photo: Norges Bank

Uncertainty can have both good and bad effects, so identifying the correct kind matters when studying its effects, a paper published on April 18 by Norges Bank finds. Vegard Høghaug Larsen uses ‘Latent Dirichlet Allocation’, a form of text analysis, in the paper Components of uncertainty. This allows him to “disentangle” different types of uncertainty by analysing news articles. The paper differs from similar work by employing a “topic model”, which focuses on types of news rather than relev