Indexing Economic Fluctuation Narratives from Keiki Watchers Survey

TL;DR

This paper develops indices from economic survey narratives to better capture economic fluctuations, showing they correlate more strongly with diffusion indices than traditional metrics.

Contribution

It introduces a novel method to quantify economic narratives from survey texts, enhancing economic forecasting tools.

Findings

Proposed indices show stronger correlation with diffusion indices.

Narrative-based indices outperform traditional economic metrics.

Evaluation confirms the effectiveness of the new indices.

Abstract

In this paper, we design indices of economic fluctuation narratives derived from economic surveys. Companies, governments, and investors rely on key metrics like GDP and industrial production indices to predict economic trends. However, they have yet to effectively leverage the wealth of information contained in economic text, such as causal relationships, in their economic forecasting. Therefore, we design indices of economic fluctuation from economic surveys by using our previously proposed narrative framework. From the evaluation results, it is observed that the proposed indices had a stronger correlation with cumulative lagging diffusion index than other types of diffusion indices.