Forward or backward looking? The economic discourse and the observed reality

Is academic research anticipating economic shake-ups or merely reflecting the past? Exploiting the corpus of articles published in the Journal of Economics and Statistics (Jahrbücher für Nationalökonomie und Statistik) for the years 1949 to 2010, this pilot study proposes a quantitative framework for addressing these questions. The framework comprises two steps. First, methods from computational linguistics are used to identify relevant topics and their relative importance over time. In particular, Latent Dirichlet Analysis is applied to the corpus after some preparatory work. Second, for some of the topics which are closely related to specific economic indicators, the developments of topic weights and indicator values are confronted in dynamic regression and VAR models. The results indicate that for some topics of interest, the discourse in the journal leads developments in the real economy, while for other topics it is the other way round.