In Search of Information: Use of Google Trends’ Data to Narrow Information Gaps for Low-income Developing Countries

Futoshi Narita and Rujun Yin

No 2018/286, IMF Working Papers from International Monetary Fund

Abstract: Timely data availability is a long-standing challenge in policy-making and analysis for low-income developing countries. This paper explores the use of Google Trends’ data to narrow such information gaps and finds that online search frequencies about a country significantly correlate with macroeconomic variables (e.g., real GDP, inflation, capital flows), conditional on other covariates. The correlation with real GDP is stronger than that of nighttime lights, whereas the opposite is found for emerging market economies. The search frequencies also improve out-of-sample forecasting performance albeit slightly, demonstrating their potential to facilitate timely assessments of economic conditions in low-income developing countries.

Keywords: WP; finance SVI; government SVI; health SVI; travel SVI; exchange rate; Google's SVI; Capital flows; Economic growth; Google search volume index; Inflation; Low-income developing countries; Nighttime lights; Nowcasting; Short-term forecasting; nominal exchange rate; Real effective exchange rates; Exchange rates; Asset prices; Unemployment rate; Global (search for similar items in EconPapers)
Pages: 51
Date: 2018-12-14
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Citations: View citations in EconPapers (19)

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