Using Internet Data to Account for Special Events in Economic Forecasting

Torsten Schmidt and Simeon Vosen

No 382, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: Information about special events can improve economic forecasts substantially. However, due to the lack of timely quantitative data about these events, it has been difficult for professional forecasters to utilise such information in their forecasts. This paper investigates whether Internet search data can improve economic predictions in times of special events. An analysis of 'cash for clunkers' programs in four selected countries exemplifies that including search query data into statistical forecasting models improves the forecasting performance in almost all cases. However, the challenge to identify irregular events and to find the appropriate time series from Google Insights for search remains.

Keywords: forecast adjustment; Google Trends; private consumption (search for similar items in EconPapers)
JEL-codes: C53 E21 E27 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:382

DOI: 10.4419/86788437

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