Firmin Ayivodji, Etienne Briand, Kevin Moran, Dalibor Stevanovic
arXiv 14 May 2026 · Econometrics
arXiv:2605.15092 · PDF · DOI · OpenAlex · Extracted main text
News media coverage of monetary policy is not a passive transcript of central-bank communication: it filters announcements, macroeconomic news, and editorial choices into narratives that move expectations and policy decisions. We embed media sentiment into a behavioral New-Keynesian model in which the central bank reacts to sentiment and sentiment follows an explicit law of motion. We construct monetary-policy sentiment indicators from more than 50,000 Canadian newspaper articles using dictionary methods, transformer models, and a generative-AI framework. Media sentiment shifts household inflation and wage expectations, improves out-of-sample forecasts of GDP growth and inflation, and loads positively on the Bank of Canada's estimated Taylor rule once treated as endogenous. A Bayesian SVAR identifies anticipated and unanticipated monetary-policy shocks together with a narrative shock; the narrative shock contributes a non-trivial share of medium-horizon macroeconomic variance, and a counterfactual that shuts down the dynamic feedback from media sentiment attenuates the propagation of monetary policy to output and prices. %The results suggest that media narratives are an integral part of monetary-policy transmission, not merely an additional source of information.
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The works this paper leans on most, across its whole bibliography — not restricted to papers in our corpus. Ranked by composite intensity, which combines how often a work is mentioned, how many sections mention it, and how much of that falls in the main text rather than the appendix.
| Reference | Intensity | Mentions | Sections | Main text | |
|---|---|---|---|---|---|
| 1 | Gabaix, Xavier (2020) A Behavioral New Keynesian model | 0.693 | 5 | 1 | 100% |
| 2 | Pang, Ke and Shiamptanis, Christos (2024) Is the Bank of Canada concerned about inflation or the state of the economy? | 0.693 | 5 | 1 | 100% |
| 3 | Andre, Peter and Haaland, Ingar and Roth, Christopher and Wiederholt… (2026) Narratives about the Macroeconomy | 0.644 | 4 | 1 | 100% |
| 4 | D'Amico, Stefania and King, Thomas B (2023) What does anticipated monetary policy do? | 0.624 | 11 | 2 | 36% |
| 5 | Ash, Elliott and Hansen, Stephen (2023) Text algorithms in economics | 0.585 | 3 | 1 | 100% |
| 6 | Ayivodji, Firmin and Rauh, Christopher (2023) Can Media Narratives Predict House Price Movements? self | 0.585 | 3 | 1 | 100% |
| 7 | Chahrour, Ryan and Nimark, Kristoffer and Pitschner, Stefan (2021) Sectoral media focus and aggregate fluctuations | 0.585 | 3 | 1 | 100% |
| 8 | Nimark, Kristoffer P (2014) Man-bites-dog business cycles | 0.585 | 3 | 1 | 100% |
| 9 | Romer, Christina D and Romer, David H (2000) Federal Reserve information and the behavior of interest rates | 0.585 | 3 | 1 | 100% |
| 10 | Baker, Scott R and Bloom, Nicholas and Davis, Steven J (2016) Measuring economic policy uncertainty | 0.511 | 2 | 2 | 50% |
Showing the top 10 of 76 scored citations.