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Working Paper
The Beige Book and the Business Cycle: Using Beige Book Anecdotes to Construct Recession Probabilities
The Federal Reserve releases the Beige Book prior to each Federal Open Market Committee meeting. The report is a narrative based on anecdotal and qualitative information collected from a wide range of contacts in each of the 12 Federal Reserve Districts. We take the lexicon approach to text analysis to create sentiment indexes that track changes in economic conditions from the very first Beige Book in May 1970 to the most recent (at the time of writing) in October 2024. We create additional indexes to account for various current-event shocks, such as political events or natural disasters that ...
Report
Fed Transparency and Policy Expectation Errors: A Text Analysis Approach
This paper seeks to estimate the extent to which market-implied policy expectations could be improved with further information disclosure from the FOMC. Using text analysis methods based on large language models, we show that if FOMC meeting materials with five-year lagged release dates—like meeting transcripts and Tealbooks—were accessible to the public in real time, market policy expectations could substantially improve forecasting accuracy. Most of this improvement occurs during easing cycles. For instance, at the six-month forecasting horizon, the market could have predicted as much ...
Working Paper
The Beige Book and the Business Cycle: Using Beige Book Anecdotes to Construct Recession Probabilities
The Federal Reserve releases the Beige Book prior to each Federal Open Market Committee meeting. The report is a narrative based on anecdotal and qualitative information collected from a wide range of contacts in each of the 12 Federal Reserve Districts. We take the lexicon approach to text analysis to create sentiment indexes that track changes in economic conditions from the very first Beige Book in May 1970 to the most recent (at the time of writing) in October 2024. We create additional indexes to account for various current-event shocks, such as political events or natural disasters that ...