Ruhr Economic Papers
Ruhr Economic Papers #382
Using Internet Data to Account for Special Events in Economic Forecasting
by Torsten Schmidt and Simeon Vosen
RWI, 11/2012, 15 S./p., 8 Euro, ISBN 978-3-86788-437-2 DOI: 10.4419/86788437download
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.
JEL-Classification: C53, E21, E27
Keywords: Forecast adjustment; Google Trends; private consumption