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Should Central Banks Care About Text Mining? A Literature Review

Author

Listed:
  • Jean-Charles Bricongne
  • Baptiste Meunier
  • Raquel Caldeira

Abstract

As text mining has expanded in economics, central banks appear to also have ridden this wave, as we review use cases of text mining across central banks and supervisory institutions. Text mining is a polyvalent tool to gauge the economic outlook in which central banks operate, notably as an innovative way to measure inflation expectations. This is also a pivotal tool to assess risks to financial stability. Beyond financial markets, text mining can also help supervising individual financial institutions. As central banks increasingly consider issues such as the climate challenge, text mining also allows to assess the perception of climate-related risks and banks’ preparedness. Besides, the analysis of central banks’ communication provides a feedback tool on how to best convey decisions. Albeit powerful, text mining complements – rather than replaces – the usual indicators and procedures at central banks. Going forward, generative AI opens new frontiers for the use of textual data.

Suggested Citation

  • Jean-Charles Bricongne & Baptiste Meunier & Raquel Caldeira, 2024. "Should Central Banks Care About Text Mining? A Literature Review," Working papers 950, Banque de France.
    • Handle: RePEc:bfr:banfra:950
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    File URL: https://www.banque-france.fr/system/files/2024-06/WP950.pdf
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    More about this item

    Keywords

    Text Mining; Sentiment Analysis; Central Banking; Generative AI; Language Models;
    All these keywords.

    JEL classification:

    • C38 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Classification Methdos; Cluster Analysis; Principal Components; Factor Analysis
    • C55 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Large Data Sets: Modeling and Analysis
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

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