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A Thousand Words Tell More Than Just Numbers: Financial Crises and Historical Headlines

Author

Listed:
  • Kim Ristolainen

    (Department of Economics, Turku School of Economics, University of Turku, Finland)

  • Tomi Roukka

    (Department of Economics, Turku School of Economics, University of Turku, Finland)

  • Henri Nyberg

    (Department of Mathematics and Statistics, University of Turku, Finland)

Abstract

We show that financial crises are preceded by changes in specific types of narrative information contained in newspaper article titles. Our novel international dataset and the resulting empirical evidence are gathered by integrating information from a large panel of economic news articles in global newspapers between the years 1870 and 2016 with conventional macroeconomic and financial indicators. We find that the predictive information of newspaper article titles that signals coming crisis episodes is substantial over and above the macroeconomic and financial indicators. The new indicators capture common features that have often been discussed as potential causes of specific crises but which have not been incorporated into empirical models.

Suggested Citation

  • Kim Ristolainen & Tomi Roukka & Henri Nyberg, 2021. "A Thousand Words Tell More Than Just Numbers: Financial Crises and Historical Headlines," Discussion Papers 149, Aboa Centre for Economics.
    • Handle: RePEc:tkk:dpaper:dp149
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    More about this item

    Keywords

    financial crisis; text data; leading indicators; topic model;
    All these keywords.

    JEL classification:

    • G00 - Financial Economics - - General - - - General
    • G01 - Financial Economics - - General - - - Financial Crises
    • N01 - Economic History - - General - - - Development of the Discipline: Historiographical; Sources and Methods
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access

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