Media narratives drive capital flows into China – NBER paper
Sentiment in news articles impacts investment decisions, regardless of country’s economic fundamentals
The tone of English-language news articles affects capital flows into China regardless of the true state of the country’s economy, research from the US National Bureau of Economic Research (NBER) has found.
The working paper uses natural language processing to extract sentiment and risk perceptions from 1.5 million articles published in 38 newspapers across 15 economies between 2007 and 2022.
The authors – Isha Agarwal, Wentong Chen and Eswar Prasad – note that the Chinese economy is unusually
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