Chinese economic behavior in times of covid-19. A new leading economic indicator based on Google trends

Manuel Monge, Gloria Claudio-Quiroga and Carlos Poza

International Economics, 2024, vol. 177, issue C

Abstract: Since December 2019 we have been living with a virus called SARS-CoV-2 which has led to health policies being given prevalence over economic ones, causing serious consequences with regard to China's economic growth. For this purpose, we have built a Real Time Leading Economic Indicator based on Google Trends that improves the performance of Composite Leading Indicators (CLIs) to anticipate GDP trends and turning points for the Chinese economy. First, we assess the effectiveness of this new leading indicator relative to China's GDP by analyzing its statistical properties. We use fractional integration techniques to show the high degree of persistence of the new Real Time Leading Economic Indicator (RT-LEI) for China. Second, we observe the same relationship between GDP and RT-LEI in the long term using a Fractional Cointegration VAR (FCVAR) model. Third, we use a multivariate Continuous Wavelet Transform analysis to show which leading indicator best fits GDP and to identify when a structural change occurs. Finally, we forecast, using Artificial Neural Networks and a KNN model based on Machine Learning, our RT-LEI predicting the conclusion of a bearish scenario, after which the recovery begins in mid-2022.

Keywords: Leading economic indicators; Business cycle; Google trends; Fractional cointegration; Machine learning (search for similar items in EconPapers)
JEL-codes: C00 C22 E32 E37 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S2110701723000744
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:177:y:2024:i:c:s2110701723000744

DOI: 10.1016/j.inteco.2023.100462

Access Statistics for this article

International Economics is currently edited by Valerie Mignon and Marcelo Olarreaga

More articles in International Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().