News cycle can give estimate of business cycle – Norges Bank paper

Norges Bank. Photo: Norges Bank

Newspaper articles can give a better high-frequency indicator of the business cycle than other more commonly used indicators, according to a working paper published on December 22 by Norges Bank.

Leif Anders Thorsrud uses a technique called Latent Dirichtlet Allocation to statistically categorise words and articles into topics that best reflect word dependencies. The system learns by itself, avoiding the need to programme it, which could introduce biases.

Thorsrud finds the index, built on the e