Nowcasting with Google Trends in an Emerging Market
Article first published online: 20 NOV 2011
Copyright © 2011 John Wiley & Sons, Ltd.
Journal of Forecasting
Volume 32, Issue 4, pages 289–298, July 2013
How to Cite
Carrière-Swallow, Y. and Labbé, F. (2013), Nowcasting with Google Trends in an Emerging Market. J. Forecast., 32: 289–298. doi: 10.1002/for.1252
- Issue published online: 19 JUN 2013
- Article first published online: 20 NOV 2011
- Google Trends;
- forecast accuracy;
- emerging markets
Most economic variables are released with a lag, making it difficult for policy-makers to make an accurate assessment of current conditions. This paper explores whether observing Internet browsing habits can inform practitioners about aggregate consumer behavior in an emerging market. Using data on Google search queries, we introduce an index of online interest in automobile purchases in Chile and test whether it improves the fit and efficiency of nowcasting models for automobile sales. Despite relatively low rates of Internet usage among the population, we find that models incorporating our Google Trends Automotive Index outperform benchmark specifications in both in-sample and out-of-sample nowcasts, provide substantial gains in information delivery times, and are better at identifying turning points in the sales data. Copyright © 2011 John Wiley & Sons, Ltd.