Beijing Institute of Mathematical Sciences and Applications

Johansson Anders , Ruize Gao , Liyan Han , Zhen Li , Jin Liu , Fei Long , Dongbo Shi , Ke Tang , Xing Yan , Qi Zhang

Yang Xu

Friday, June 5, 2026 3:00 PM - 4:00 PM

A3-2-303

Zoom 435 529 7909 (BIMSA)

We study how narratives about the macroeconomy drive exchange rates since business narratives provide incremental information that shapes macroeconomic beliefs. Relying on the full text of more than 20 million news articles from ten newspapers, we estimate a topic model that summarizes business news into interpretable thematic factors for each country. Employing machine learning methods, we disprove the exchange rate disconnect puzzle by demonstrating that the bilateral narrative factors strongly predict nominal and real exchange rates both in-sample and out-of-sample. The predictive ability of narratives is not spanned by conventional economic factors and delivers substantial economic value. We further identify the economic mechanism underlying these results by showing that business narratives capture forward-looking information about macroeconomic fundamentals.

Yang Xu, Associate Professor of the School of Economics and Management, Beihang University. My research interests span International Finance, Empirical Asset Pricing, Foreign Exchange Markets, and Corporate Finance. I have published research in leading international and domestic journals, such as Journal of Money, Credit & Banking, Journal of International Financial Markets, Institutions & Money, and the Journal of Futures Markets. I served as the principal investigator for the Youth Programs of National Natural Science Foundation of China and the National Social Science Foundation of China. In addition to my research, I am deeply committed to pedagogy; multiple teaching cases I have developed have been recognized as "Excellent Teaching Cases" by the National Steering Committees for MBA, MPAcc, and Finance Education under the Ministry of Education.