Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper constructs a text-based indicator that reflects the sentiment of the Bank of Spain economic outlook reports. Our sentiment indicator mimics very closely the first release of the GDP growth rate, which is published after the publication of the reports, and the Bank of Spain’s quarterly forecasts of the GDP growth rate. In addition, not only the narrative is consistent with the quantitative projections, but it also complements them by discussing information which is not directly reflected in the point forecasts, and may put on the table potential risks that will be included in the numerical projections of the next quarter. Thus, while the quantitative projections tend to underestimate the GDP growth rate especially during upturns, the narrative allows to outweigh this conservative bias. Overall, from a Central Bank’s communication perspective, it is the combination of quantitative forecast and narrative that provides a more precise picture of expected economic activity.