@article{4474805e14b14a52908c987762f98945,
title = "The role of sentiment in the US economy: 1920 to 1934",
abstract = "This paper investigates the role of sentiment in the US economy from 1920 to 1934 using digitised articles from The Wall Street Journal. We derive a monthly sentiment index and use a 10-variable vector error correction model to identify sentiment shocks that are orthogonal to fundamentals. We show the timing and strength of these shocks and their resultant effects on the economy using historical decompositions. Intermittent impacts of up to 15 per cent on industrial production, 10 per cent on the S&P 500 and bank loans, and 37 basis points for the credit risk spread suggest a large role for sentiment.",
keywords = "algorithmic text analysis, business sentiment, Great Depression, US interwar economy",
author = "Ali Kabiri and Harold James and John Landon-Lane and David Tuckett and Rickard Nyman",
note = "Funding Information: David Tuckett wishes to acknowledge support from the Institute of New Economic Thinking (grants no. IN01100025 and IN1300051), the Eric Simenhauer Foundation of the Institute of Psychoanalysis (London) and to the UK Research Councils (EPSRC grant reference EP/P016847/1 and a grant from the ESRC-NIESR Rebuilding Macroeconomics network). Rickard Nyman has been supported by a grant to the Centre for the Understanding of Decision-Making Uncertainty by the Institute of New Economic Thinking (Grant no INO16-00011) and the Eric Simenhauer Foundation of the Institute of Psychoanalysis (London). Ali Kabiri wishes to acknowledge support from Mr Norbert Podschlapp. The authors would like to thank Charles Goodhart for valuable advice and suggestions, Jacob Turton for research assistance and D'Maris Coffman for early guidance on sources. Any errors are our own. Publisher Copyright: {\textcopyright} 2022 The Authors. The Economic History Review published by John Wiley & Sons Ltd on behalf of Economic History Society.",
year = "2023",
month = feb,
doi = "10.1111/ehr.13160",
language = "English (US)",
volume = "76",
pages = "3--30",
journal = "Economic History Review",
issn = "0013-0117",
publisher = "Wiley-Blackwell",
number = "1",
}