Does the Beige Book Move Financial Markets?

Madeline Zavodny and Donna K. Ginther
Working Paper 2003-3
January 2003

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About two weeks prior to each FOMC meeting, the Federal Reserve releases a description of economic activity in a document called the Beige Book. The authors examine whether the descriptive content of the Beige Book affects asset prices. The results indicate that more positive Beige Book reports on economic growth are associated with increases in interest rates, particularly long-term rates, even after controlling for other macroeconomic data releases. Stronger Beige Book reports are positively associated with changes in equity prices during expansions but negatively during recessions.

JEL classification: E5, E44

Keywords: Federal Reserve, Beige Book, stock market, interest rates

The authors thank Li Zhou for research assistance and Rob Bliss, Bob Eisenbeis, Craig Hakkio, Mark Kamstra, Sharon Kozicki, Lisa Kramer, Will Roberds, Paula Tkac, and seminar participants at the University of Kansas and the Federal Reserve Bank of Kansas City for helpful comments. They also thank Nathan Balke and Mine Yucel for providing the Federal Reserve Bank of Dallas’ Beige Book index scores and David R. Payne for providing his scores. The views expressed here are the authors’ and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

Please address questions regarding content to Madeline Zavodny, Department of Economics, Occidental College, 1600 Campus Road, Los Angeles, California 90041, 323-259-2633,, or Donna K. Ginther, Department of Economics, University of Kansas, 226P Summerfield Hall, 1300 Sunnyside Drive, Lawrence, Kansas 66045, 785-864-3251,