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Does the Beige Book Move Financial Markets?

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Author Info

  • Madeline Zavodny

    ()
    (Agnes Scott College)

  • Donna K. Ginther

    ()
    (Department of Economics, University of Kansas)

Abstract

About two weeks prior to each Federal Open Market Committee (FOMC) meeting, the Federal Reserve releases a description of economic activity in a document called the Beige Book. By creating a quantitative index of these qualitative reports, we examine whether the content of the Beige Book affects asset prices. The results indicate that more positive Beige Book reports on economic growth are associated with increases in interest rates, particularly intermediate- and long-term rates, but not after controlling for several other macroeconomic indicators. The results are consistent with markets viewing the report as a summary indicator of economic growth but not of monetary policy moves in the near term.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 72 (2005)
Issue (Month): 1 (July)
Pages: 138–151

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Handle: RePEc:sej:ancoec:v:72:1:y:2005:p:138-151

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  8. Kozicki, Sharon & Tinsley, P.A., 2005. "What do you expect? Imperfect policy credibility and tests of the expectations hypothesis," Journal of Monetary Economics, Elsevier, Elsevier, vol. 52(2), pages 421-447, March.
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  15. David Fettig & Arthur J. Rolnick & David E. Runkle, 1999. "The Federal Reserve's Beige Book: A better mirror than crystal ball," The Region, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Mar, pages 10-13,28-32.
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Cited by:
  1. Sadique, Shibley & In, Francis & Veeraraghavan, Madhu & Wachtel, Paul, 2013. "Soft information and economic activity: Evidence from the Beige Book," Journal of Macroeconomics, Elsevier, Elsevier, vol. 37(C), pages 81-92.
  2. Michelle T. Armesto & Rubén Hernández-Murillo & Michael T. Owyang & Jeremy M. Piger, 2007. "Identifying asymmetry in the language of the Beige Book: a mixed data sampling approach," Working Papers, Federal Reserve Bank of St. Louis 2007-010, Federal Reserve Bank of St. Louis.
  3. Scott Hendry & Alison Madeley, 2010. "Text Mining and the Information Content of Bank of Canada Communications," Working Papers, Bank of Canada 10-31, Bank of Canada.

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