The Bank of Italy said on Monday a set of experimental indicators it created from millions of tweets that accurately tracked consumer mood on prices; being able to offer a scope for a new and efficient monetary policy tool.
Researchers identified their indicators, based on millions of tweets by Italy’s national statistics office and other forecasters provided more granular detail to the experiment.
The effort came as policy-makers around the world have increasingly turned on more to social media and unconventional sources to measure consumer behaviour as inflation continues to defy targets set by plenty of leading central banks.
Twitter has roughly 200 million active users and has turned around 10 million active users in Italy in 2019, according to the authors. The analysis started through collecting 11 million tweets posted in Italian between the June of 2013 and December 2019. The collected tweets contain at least one of a set of previously selected words that are related to prices, inflation and price dynamics.
The remaining dataset was used to build two indexes: expectations of decreasing or increasing inflation done by measuring the daily volume of tweets containing previously selected word combinations such as “very high price” or “bargain price”.And the final set of indicators were then created based on divergence between the two indexes.
The authors stated that their work highlighted the significance and policy implications of information contained on social networks but also acknowledged further study was necessary to interpret the data.
Twitter a goldmine for tracking consumer mood on price, according to the Bank of Italy
