Choong Lyol Lee | Searcharxiv

arXiv2026

Bounded Rationality in Central Bank Communication

This study explores the influence of FOMC sentiment on market expectations, focusing on cognitive differences between experts and non-experts. Using sentiment analysis of FOMC minutes, we integrate these insights into a bounded rationality model to examine the impact on inflation expectations. Results show that experts form more conservative expectations, anticipating FOMC stabilization actions, while non-experts react more directly to inflation concerns. A lead-lag analysis indicates that institutions adjust faster, though the gap with individual investors narrows in the short term. These findings highlight the need for tailored communication strategies to better align public expectations with policy goals.

econ.EM↗

arXiv2026

DisSim-FinBERT: Text Simplification for Core Message Extraction in Complex Financial Texts

This study proposes DisSim-FinBERT, a novel framework that integrates Discourse Simplification (DisSim) with Aspect-Based Sentiment Analysis (ABSA) to enhance sentiment prediction in complex financial texts. By simplifying intricate documents such as Federal Open Market Committee (FOMC) minutes, DisSim improves the precision of aspect identification, resulting in sentiment predictions that align more closely with economic events. The model preserves the original informational content and captures the inherent volatility of financial language, offering a more nuanced and accurate interpretation of long-form financial communications. This approach provides a practical tool for policymakers and analysts aiming to extract actionable insights from central bank narratives and other detailed economic documents.

econ.EM↗