A New Approach to Textual Analysis using Large Language Models: Application to the Analysis of Recent Wage and Price Developments in Japan

This paper examines whether textual data analysis using Large Language Models (LLMs) can be applied to assessing economic activity and prices in light of the rapid development of LLMs in recent years. LLMs have advantages in that there are a wide range of models available for use without large initial costs and that these models, which have already acquired basic knowledge of language, can analyze any topic or text and are beginning to be used in economic analysis more widely, including those of central banks. This paper, as an example, attempts to use LLMs to analyze recent wage and price developments in Japan using comments from the Cabinet Office's Economy Watchers Survey. The results suggest that the cause of increasing selling prices is gradually shifting from raw material costs to labor costs.