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  • Taking the Fed at its Word: A New Approach to Estimating Central Bank Objectives using Text Analysis

    Adam Hale Shapiro, Daniel J. Wilson

    Federal Reserve Research: san francisco We propose a new approach to estimating central bank preferences, including the implicit inflation target, that requires no priors on the underlying macroeconomic structure nor observation of monetary policy actions. Our approach entails directly estimating the central bank’s objective function from the sentiment expressed by policymakers in their internal meetings. […]