Whereas the language in the various Beige Books was relatively conservative, the Wall Street Journal sources may have used more extreme words or more exaggerated statements.
We compare these qualitative forecasts with the Beige Book.
Louis District and roughly covers the time period of the two previous Beige Books.
All of this information is then summarized for the Beige Book by sector and district.
A smaller number of Fed districts have reported slower economic growth in recent Beige Books, with the latest showing only one clearly reporting a slowdown, compared with two in the October report and five in the September report.
As for the housing market, the Beige Book said, ''Almost all districts reported that overall housing market activity continued to slow, especially in the single-family segment.
We focus on results without day-of-the-week fixed effects because all Beige Books have been released on a Wednesday since mid-1988 and day-of-the-week fixed effects, therefore, might pick up time trends as well as any weekday effects.
Our findings are also consistent with Campbell's (1995) observation that modest increases in short-term rates as a result of tightening by the FOMC can provoke large responses in long-term yields; if markets view stronger Beige Books as signaling upcoming tightening, there may be larger movements in longer-term yields than in short-term interest rates.
However, the results are consistent with financial markets interpreting the Beige Book as indicating the direction of monetary policy in the longer run, with stronger Beige Books signaling future increases in short-term rates.
Bond yields react more to Beige Books that indicate that the economy is contracting than to expansionary Beige Books.
Each author read and scored the Beige Books
separately, assigning a value between -2 and 2 to each district and to the national summary.
To achieve some consistency of scoring using this approach, however, the researcher must read all the Beige Books
"blind" (without knowing the date of each report) so as to prevent hindsight knowledge from contaminating scores.