Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/210138
Authors: 
Larsen, Vegard Høghaug
Thorsrud, Leif Anders
Year of Publication: 
2018
Series/Report no.: 
Working Paper No. 3/2018
Abstract: 
This article quantifies the epidemiology of media narratives relevant to business cycles in the US, Japan, and Europe (euro area). We do so by first constructing daily business cycle indexes computed on the basis of the news topics the media writes about. At a broad level, the most in fluential news narratives are shown to be associated with general macroeconomic developments, finance, and (geo-)politics. However, a large set of narratives contributes to our index estimates across time, especially in times of expansion. In times of trouble, narratives associated with economic fl uctuations become more sparse. Likewise, we show that narratives do go viral, but mostly so when growth is low. While narratives interact in complicated ways, we document that some are clearly associated with economic fundamentals. Other narratives, on the other hand, show no such relationship, and are likely better explained by classical work capturing the market's animal spirits
Subjects: 
business cycles
narratives
dynamic factor model
latent dirichlet allocation
C55
E32
E71
N10
Persistent Identifier of the first edition: 
ISBN: 
978-82-8379-024-5
Creative Commons License: 
https://creativecommons.org/licenses/by-nc-nd/4.0/deed.no
Document Type: 
Working Paper
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