Centre for Applied Macroeconomics and Commodity Prices (CAMP)
CAMP is established to bring together economists working on applied macroeconomic issues, with special emphasis on energy economics.
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LAST FNI UPDATE
The FNI was last updated 9 June.
The FNI index for the Norwegian economy has been updated with figures up to and including June 9. The index remains below trend, but has risen significantly since the trough in the end of April/beginning of May.
The development in the FNI the past months has been extraordinary. Already in early-March, the index fell abruptly and rapidly to very low levels. From mid-March, the index levels was as low as during the financial crisis, and signaled a severe and potentially long-lasting recession. However, in late April, this started to change. Since then, the index has gradually become less negative and is now approaching a more normal situation. Together with the development of the past weeks, the updates figures indicate that this will be a V-shaped recession, and not a long-term U-shaped economic downturn. We are, however, still below trend growth, the uncertainty is large, and the picture can quickly change again.
In the time that follows, we will monitor the business cycle closely, and we will publish updated FNI numbers more often than the regular monthly updates.
Read more on retriever.no/fni.
The figure graphs the Financial News Index (FNI) with 68 percent confidence bands. The blue solid line demeaned quarterly GDP growth Mainland Norway, sourced from Statistics Norway (SSB). Please use the citation "FNI - Retriever/CAMP_BI" when using the index.
For previous FNI updates, please visit our blog.
For more information, contact Professor Hilde C. Bjørnland, BI Norwegian Business School, +47 464 10 767, firstname.lastname@example.org or Associate Professor Leif A. Thorsrud, BI Norwegian Business School, +47 988 37 976, email@example.com.
ABOUT THE INDEX
The Financial News index (FNI) is designed to track Norwegian GDP growth and the business cycle at high frequency. Its underlying indicators, and novelty, are daily time series representing how much the media writes about various topics.
The central idea behind the index is simple: To the extent that newspapers provide a relevant description of the economy, the more intensive a given topic is represented in the newspaper at a given point in time, the more likely it is that this topic represents something of importance for the economy's current and future needs and developments.
Thus, the FNI captures the continuously evolving narrative about economic conditions, and relates this to actual GDP growth and the business cycle.
The average value of the FNI is zero. Progressively bigger positive values indicate progressively better-than-average business cycle conditions. Conversely, progressively more negative values indicate progressively worse-than-average conditions.
The FNI is produced by Retriever and Centre for Applied Macroeconomics and Commodity Prices at BI Norwegian Business School (CAMP). Please use the citation “FNI - Retriever/CAMP(BI)” when using the index.
Disclaimer: All opinions and estimates of the FNI are, regardless of source, given in good faith. The user assumes the entire risk related to the use of this information. The authors are providing this information "as is," and the authors disclaim any and all warranties of merchantability or fitness for a particular purpose. In no event will the authors be liable for any damages or lost profit resulting from any use or misuse of this information.
Decision makers and forecasters need to assess the state of the economy in real time to devise appropriate policy responses and condition on an updated information set. However, in real time, our main measure of economic activity, GDP growth, is not observed as it is compiled on a quarterly frequency and published with a considerable lag, usually up to at least one quarter.
Internationally, many high frequency business cycle indicators have been constructed to mediate these caveats. For the Norwegian economy, no such high frequency indicators exist. The FNI aims to fill this hole. However, unlike other (international) indexes with the same purpose, it has one distinctive property: The information set used to derive the index consists of daily newspaper topics.
The FNI published here utilizes a large newspaper corpus from many different news sources. In short, this combined corpus is first decomposed into distinct daily news topics. In turn, these news topics are used together with Gross Domestic Product (GDP) to derive the daily index. The construction of the FNI is based on the framework developed in Leif Anders Thorsrud (2018), "Words are the new numbers: A newsy coincident index of business cycles", Journal of Business & Economic Statistics. In this research article it is shown that the derived index has very good classification properties for the Norwegian business cycle. That is, it captures expansions and recessions well. We refer to this article for an in-debt description of how the index is constructed.
This is the start of an ongoing research cooperation to enhance knowledge on macroeconomic developments.
The construction of the FNI is part of a larger research agenda where unstructured textual data is used to understand and explain (macro) economic fluctuations. The interested reader can find related literature here:
Thorsrud, Leif Anders (2018), "Words are the new numbers: A newsy coincident index of the business cycle", Journal of Business & Economic Statistics.
Larsen, Vegard H. and Thorsrud, Leif Anders (2019), "The value of news for economic developments", Journal of Econometrics
Here we present Centre for Applied Macro- and Petroleum Economics (CAMP) forecasts for key Norwegian macroeconomic variables.
The purpose of this project is to improve human knowledge on macroeconomic models and their forecasts.