(Almost) 200 Years of News-Based Economic Sentiment

57 Pages Posted: 29 Oct 2022 Last revised: 19 Dec 2023

See all articles by Jules H. van Binsbergen

Jules H. van Binsbergen

University of Pennsylvania - The Wharton School; National Bureau of Economic Research (NBER)

Svetlana Bryzgalova

London Business School - Department of Finance; Centre for Economic Policy Research (CEPR)

Mayukh Mukhopadhyay

London Business School - Department of Finance

Varun Sharma

Kelley School of Business, Indiana University; Nanyang Business School; London Business School

Multiple version iconThere are 2 versions of this paper

Date Written: October 28, 2022

Abstract

Using text from 200 million pages of 13,000 US local newspapers and machine learning
methods, we construct a 170-year-long measure of economic sentiment at the country
and state levels, that expands existing measures in both the time series (by more than a
century) and the cross-section. Our measure predicts GDP (both nationally and locally),
consumption, and employment growth, even after controlling for commonly-used predictors,
as well as monetary policy decisions. Our measure is distinct from the information
in expert forecasts and leads its consensus value. Interestingly, news coverage has become
increasingly negative across all states in the past half-century.

Keywords: Business cycle, macroeconomic news, economic sentiment, monetary policy, textual analysis, machine learning, big data, neural networks

JEL Classification: G1, G4, E2

Suggested Citation

van Binsbergen, Jules H. and Bryzgalova, Svetlana and Mukhopadhyay, Mayukh and Sharma, Varun, (Almost) 200 Years of News-Based Economic Sentiment (October 28, 2022). Available at SSRN: https://ssrn.com/abstract=4261249 or http://dx.doi.org/10.2139/ssrn.4261249

Jules H. Van Binsbergen

University of Pennsylvania - The Wharton School ( email )

3641 Locust Walk
Philadelphia, PA 19104-6365
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://www.nber.org/people/jules_vanbinsbergen

Svetlana Bryzgalova (Contact Author)

London Business School - Department of Finance ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Mayukh Mukhopadhyay

London Business School - Department of Finance ( email )

Sussex Place
Regent's Park
London NW1 4SA
United Kingdom

Varun Sharma

Kelley School of Business, Indiana University ( email )

1275 E 10th St
Bloomington, IN 47405
United States
8128377912 (Phone)
47405 (Fax)

HOME PAGE: http://www.sharmav.com

Nanyang Business School ( email )

48 Nanyang Avenue
Singapore, Singapore 639818
Singapore

HOME PAGE: http://dr.ntu.edu.sg/cris/rp/rp02032

London Business School ( email )

Sussex Place
Regent's Park
London, London NW1 4SA
United Kingdom

HOME PAGE: http://www.sharmav.com

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