Can news help measure economic sentiment? An application in COVID-19 times

Pablo Aguilar, Corinna Ghirelli, Matías Pacce and Alberto Urtasun

No 2027, Working Papers from Banco de España

Abstract: We construct a new newspaper-based sentiment indicator for Spain that allows us to monitor Spanish economic activity in real-time. As opposed to the traditional survey-based confidence indicators that are released at the end of the month, our indicator can be constructed on a daily basis and updated in real-time. We compare our proposed index with the popular Economic Sentiment Indicator of the European Commission, and we show that ours performs significantly better in nowcasting the Spanish GDP. In addition, our indicator proves to be helpful in order to predict the current COVID-19 recession from an earlier date. All in all, our indicator performs similarly to or even outperforms other soft indicators, with the advantage of being updated daily. Thus, it provides a valuable option when measuring the confidence in the economy.

Keywords: nowcasting; GDP; recession; real-time; textual analysis; sentiment indicators; soft indicators (search for similar items in EconPapers)
JEL-codes: C23 C53 E32 E37 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2020-08
New Economics Papers: this item is included in nep-eec and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Can news help measure economic sentiment? An application in COVID-19 times (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:2027

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