Researchers Use Google Trends Data to Gauge Economic Uncertainty

May 14, 2018

Repository for economic research Munich Personal RePEc Archive (MPRA) announces the paper, “Google ItUp! A Google Trends-Based Uncertainty Index for the United States and Australia.” We are intrigued by this use of Google Trends data. The introduction specifies:

“This paper constructs Google Trends-based uncertainty indices (GTU indices henceforth) for the United States and Australia. These indices are based on uncertainty-related keywords frequently mentioned in reference economic documents like the Federal Reserve’s Beige Book for the United States and the Reserve Bank’s Monetary Policy Statement for Australia. These documents gather information on current economic conditions based on interviews with key business contacts, economists, and market experts (among other sources). Hence, they are likely to be a good proxy of entrepreneurs’ uncertainty as regards future business conditions. …

And we noted this statement:

“Google Trends data are freely available in real time. The first characteristic facilitates the replicability of scientific analysis, while the second one is consistent with the idea of constructing leading indicators, which is relevant for sharpening the identification of causal relationships.”

The paper, available as a PDF here, is credited to researchers at Italy’s University of Padova and at the University of Melbourne in Australia. It describes how the team constructed their “GTU index,” their verification procedures, and their conclusions, followed by an informative list of references. We also learn that the Australian Research Council provided financial support for this research. The PDF noted above is freely accessible, so navigate there for more information.

Cynthia Murrell, May 14, 2018

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