(Revised November 2020)
The Vitality of Narratives in Economic Forecasts
Steven A. Sharpe, Nitish R. Sinha and Christopher A. Hollrah
The sentiment, or “Tonality”, extracted from the narratives that accompany Federal Reserve financial forecasts is strongly correlated sms lån på minuttet future financial efficiency, positively sms lån på minuttet GDP and negatively sms lån på minuttet unemployment and inflation. Furthermore, Tonality conveys incremental recordsdata in that it predicts errors in each and each Federal Reserve and non-public-sector forecasts of GDP, unemployment, and financial policy up to four quarters out. Tonality equally predicts inventory returns. Tonality is most informative when uncertainty is excessive and level forecasts predict subpar growth. Quantile regressions demonstrate that worthy of Tonality’s forecasting energy arises from its signal of plan back dangers to financial efficiency and inventory returns.
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November 23, 2020