Central Bank Communication as Literature: A Narrative Economics Survey on Fed Speak and Market Expectations

Abstract

Central bank communication has evolved from a peripheral policy instrument into its primary transmission mechanism. This survey treats "Fed speak" as a narrative-economic phenomenon, applying Shiller's (2017) framework to bridge qualitative rhetoric analysis and quantitative volatility modeling. We organize forty years of measurement methodology into four phases: manual coding, dictionary-based analysis, machine learning and NLP, and large language models. For each phase we assess strengths and limitations specific to central bank text's constructive ambiguity and committee-authored register. We then map four transmission channels — signaling, portfolio rebalancing, coordination, and cross-border spillover — through which textual narratives generate measurable market volatility, and connect this literature to GARCH-family models. We propose hybrid GARCH-MIDAS architectures incorporating high-frequency textual sentiment as a research frontier.

Author abstract from the research manuscript. Typography and line breaks have been normalized; the linked source may show a different manuscript version.