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Getting sentimental: Using news sentiment to measure financial stress in New Zealand

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Key findings: • In this Note, we construct new high-frequency indicators which measure the sentiment of New Zealand news articles over time. • We test the usefulness of these news sentiment indicators as a measure of early-stage financial stress in New Zealand, one of several possible applications for these indicators. • The news sentiment indicators provide similar information to measures of consumer and business confidence. As the sentiment measures are updated more frequently than the survey-based confidence measures they can provide more timely information and more clearly identify the effect of specific events on consumer and business sentiment. • Our results suggest the news sentiment indicators can be a useful complement to the forward-looking indicators of financial stress we monitor, and we are considering how to enhance and build these techniques into our ongoing assessment of financial stability.

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  • Trent Lockyer, 2024. "Getting sentimental: Using news sentiment to measure financial stress in New Zealand," Reserve Bank of New Zealand Analytical Notes series AN2024/07, Reserve Bank of New Zealand.
    • Handle: RePEc:nzb:nzbans:2024/07
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    File URL: https://www.rbnz.govt.nz/-/media/project/sites/rbnz/files/publications/analytical-notes/2024/getting-sentimental-using-news-sentiment-to-measure-financial-stress-in-new-zealand.pdf
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