By Evan A. Schnidman, Sep 20, 2018
One of the most challenging problems in economics is how to measure the financial market effects of policy decisions halfway around the world. For instance, how will U.S. tariffs on Chinese goods impact the Australian economy? Standard economic data does not provide a clear answer, but alternative data can offer valuable insights into the effects of these policies that are currently the subject of much speculation.
In particular, specialized sentiment analysis of central bank communications can be used to identify the impact U.S. trade policy—and the resulting uncertainty in China—has had on the tone of the Reserve Bank of Australia’s communications.
