Appendix C: Variable Description | RDP 2025-06: An AI-powered Tool for Central Bank Business Liaisons: Quantitative Indicators and On-demand Insights from Firms

RDP 2025-06: An AI-powered Tool for Central Bank Business Liaisons: Quantitative Indicators and On-demand Insights from Firms Appendix C: Variable Description

Nicholas Gray, Finn Lattimore, Kate McLoughlin and Callan Windsor

August 2025

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Table C1: Variables Used for Nowcasting $Δ$ *WPI*_t
Variable	Definition	Specification^(a)	Current^(b)	Source
Target variable
$Δ$ WPI_t	Growth in the wage price index for the private sector.	Per cent, standardised		ABS
Feature block 1: Baseline Phillips curve features
$Δ$ WPI_t−1	Lag of $Δ$ WPI_t	Per cent, standardised	No	ABS
UnempGap_t−1	Gap between the unemployment rate and the NAIRU (the non-accelerating inflation rate of unemployment).	Percentage points, standardised	No	ABS, RBA
UnutilGap_t−1	Gap between the underutilisation rate and NAIRLU (the non-accelerating inflation rate of labour underutilisation).	Percentage points, standardised	No	ABS, RBA
$Δ$ InfExp_t−1	A composite measure of inflation expectation.	Percentage points, standardised	No	RBA
Feature block 2: Staff scores
$W a g e s_{t}^{l i k e r t}$	Score from −5 to +5 based on wages conditions reported by liaison contacts compared with one year ago.	Ordinal score, standardised	Yes	RBA
$E x p e c t e d W a g e s_{t}^{l i k e r t}$	Score from −5 to +5 based on expected wage conditions reported by liaison contacts for the year ahead.	Ordinal score, standardised	Yes	RBA
$E m p l o y m e n t I n t e n t i o n s_{t}^{l i k e r t}$	Score from −5 to +5 based on employment intentions reported by liaison contacts for the year ahead.	Ordinal score, standardised	Yes	RBA
$P r i c e s_{t}^{l i k e r t}$	Score from −5 to +5 based on price conditions reported by liaison contacts compared with one year ago.	Ordinal score, standardised	Yes	RBA
$E x p e c t e d P r i c e s_{t}^{l i k e r t}$	Score from −5 to +5 based on expected price conditions reported by liaison contacts for the year ahead.	Ordinal score, standardised	Yes	RBA
Feature block 3: Text-based features extracted from liaison
$W a g e s_{t}^{D i c t e x p o s u r e}$	Count of terms in the wages dictionary that appear in text snippets as a share of total words.	Per cent, standardised	Yes	RBA
$L a b o u r_{t}^{D i c t e x p o s u r e}$	Count of terms in labour dictionary that appear in text snippets as a share of total words.	Per cent, standardised	Yes	RBA
$W a g e s_{t}^{D i c t t o n e}$	Net balance of terms from sentiment dictionaries appearing in wages text snippets as a share of total words in wages snippets.	Index between −1 and 1, standardised	Yes	RBA
$L a b o u r_{t}^{D i c t t o n e}$	Net balance of terms from sentiment dictionaries appearing in labour text snippets as a share of total words in labour snippets.	Index between −1 and 1, standardised	Yes	RBA
$W a g e s_{t}^{L M e x p o s u r e}$	Count of wages text snippets classified by an LM as a share of total text snippets.	Per cent, standardised	Yes	RBA
$L a b o u r_{t}^{L M e x p o s u r e}$	Count of labour text snippets classified by an LM as a share of total text snippets.	Per cent, standardised	Yes	RBA
$W a g e s_{t}^{L M t o n e}$	Net tone of all wages text snippets classified by an LM.	Index between –1 and 1, standardised	Yes	RBA
$L a b o u r_{t}^{L M t o n e}$	Net tone of all labour text snippets classified by an LM.	Index between –1 and 1, standardised	Yes	RBA
$U n c e r t a i n t y_{t}^{D i c t e x p o s u r e}$	Count of terms in uncertainty dictionary that appear in text snippets as a share of total words.	Per cent, standardised	Yes	RBA
$Δ W a g e s_{t}^{L M n u m e x t r a c t}$	LM-based extraction of firm-reported growth in wages compared with one year ago in liaison text. Top and bottom deciles removed from sample.	Per cent, standardised	Yes	RBA
$Δ P r i c e s_{t}^{L M n u m e x t r a c t}$	LM-based extraction of firm-reported growth in prices compared with one year ago in liaison text. Top and bottom deciles removed from sample.	Per cent, standardised	Yes	RBA
$Δ W a g e s_{t}^{H a n d c o l l e c t e d}$	Hand-collected, firm-reported growth in wages compared with one year ago. Top and bottom 15% removed from sample.	Per cent, standardised	Yes	RBA
Notes: (a) Standardisation to a mean of 0 and standard deviation of 1 is conducted within each in-sample window. (b) Indicator of whether current quarter data is available at time of nowcast, otherwise only the lagged quarter is available.