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Nakitte

Institutional research & analysis

Source: Federal Reserve

CENTRAL BANK

Working PaperMarch 30, 2026

FEDS Paper: Validating Large Language Model Annotations

Anne Lundgaard Hansen This paper proposes a validation framework for LLM-generated measurements when reliable benchmarks are unavailable. Validity is established by testing whether an LLM can reconstruct passages from annotated labels while maintaining semantic consistency with the original text. The framework avoids circular reasoning by establishing testable prerequisite properties that must be met for a validation to be considered successful. Application to news article data demonstrates t...

Federal Reserve1 min read
Working PaperMarch 23, 2026

FEDS Paper: AI and Coder Employment: Compiling the Evidence

Leland D. Crane and Paul E. Soto We evaluate whether LLMs have had any discernible impact on the aggregate labor market so far. We focus on occupations that are computer programming-intensive, motivated by data showing that coding is one of the most LLM-exposed tasks. Linking O*NET to CPS we find that aggregate employment of coders has decelerated sharply since the introduction of ChatGPT. Using a novel control variable for industry-level shocks we show that the deceleration is not attributab...

Federal Reserve1 min read
Working PaperMarch 23, 2026

FEDS Paper: Queuing, Service Time, and Price Dynamics in Residential Mortgage Lending

Akos Horvath and Benjamin S. Kay Building on queuing theory, we develop and empirically validate a novel theoretical model of residential mortgage supply. Our model gives insight into how the stochastic arrival and sequential servicing of loan applications affect mortgage origination. The model provides closed-form predictions for lenders’ optimal response to changes in the level and price elasticity of mortgage demand. Using confidential HMDA data, we estimate that a one standard deviation i...

Federal Reserve1 min read
Working PaperMarch 23, 2026

FEDS Paper: Model Uncertainty and the Pricing of Hurricane Risk in Florida

Erik Heitfield This paper examines how model uncertainty affects the price of catastrophe risk insurance. We use unique data on expected loss rate projections from seven hurricane risk models approved by regulators for use in Florida property insurance rate setting to quantify model uncertainty. By combining these data with newly published information on local property insurance markets, we are able to empirically test the relationship between model uncertainty and insurance premiums across F...

Federal Reserve1 min read
Working PaperMarch 20, 2026

IFDP Paper: Risk in a Data-Rich Model

Dario Caldara, Haroon Mumtaz, and Molin Zhong We characterize asymmetric tail risk across over one hundred U.S. macroeconomic and financial variables using a dynamic factor model with stochastic volatility. The model unifies growth-at-risk, inflation-at-risk, and sectoral heterogeneity through common factors whose volatility responds endogenously to shocks, combined with heterogeneous factor loadings. We find that asymmetric tail risk is pervasive and heterogeneous: some sectors exhibit sever...

Federal Reserve1 min read