Fed authors construct ‘financial stability sentiment’ index
Index derives sentiment from central bank financial stability reports
Researchers at the Federal Reserve have created a “financial stability sentiment” index, drawn from the wording used in central bank financial stability reports (FSRs), publishing their results in a Fed working paper in March.
Ricardo Correa, Keshav Garud, Juan Londono and Nathan Mislang developed a “dictionary” of 391 words to reflect sentiment, 96 of them positive and 295 negative. They then tested the FSRs of 35 central banks over the period 2005–15.
Though the dynamics differ from country
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