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Does the Beige Book Move Financial Markets?

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  • Madeline Zavodny
  • Donna K. Ginther

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.

Suggested Citation

  • Madeline Zavodny & Donna K. Ginther, 2005. "Does the Beige Book Move Financial Markets?," Southern Economic Journal, John Wiley & Sons, vol. 72(1), pages 138-151, July.
    • Handle: RePEc:wly:soecon:v:72:y:2005:i:1:p:138-151
    DOI: 10.1002/j.2325-8012.2005.tb00692.x
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    Cited by:

    1. Michelle T. Armesto & Ruben Hernandez-Murillo & Michael T. Owyang & Jeremy M. Piger, 2007. "Identifying asymmetry in the language of the Beige Book: a mixed data sampling approach," Working Papers 2007-010, Federal Reserve Bank of St. Louis.
    2. Scott Hendry & Alison Madeley, 2010. "Text Mining and the Information Content of Bank of Canada Communications," Staff Working Papers 10-31, Bank of Canada.

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