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

This paper finds that online search frequencies about a country significantly correlate with macroeconomic variables, conditional on other covariates.

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.

This work is part of the ‘Macroeconomics in Low-income countries’ programme

Citation

Futoshi Narita and Rujun Yin (2018) In Search of Information: Use of Google Trends’ Data to Narrow Information Gaps for Low-income Developing Countries. IMF Working Paper No. 18/286

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

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Published 14 December 2018