Torsten Schmidt

Forecasting Private Consumption: Survey-Based Indicators vs. Google Trends

In this study we introduce a new indicator for private consumption based on search query time series provided by Google Trends. The indicator is based on factors extracted from consumption-related search categories of the Google Trends application Insights for Search. The forecasting performance of the new indicator is assessed relative to the two most common survey-based indicators - the University of Michigan Consumer Sentiment Index and the Conference Board Consumer Confidence Index. The results show that in almost all conducted in-sample and out-of-sample forecasting experiments the Google indicator outperforms the survey-based indicators. This suggests that incorporating information from Google Trends may offer significant benefits to forecasters of private consumption.

A Monthly Consumption Indicator for Germany Based on Internet Search Query Data

This study introduces a monthly coincident indicator for consumption in Germany based on Google Trends data on web search activity. In real-time nowcasting experiments the indicator outperforms common survey-based indicators in predicting consumption. Unlike those indicators, it provides predictive information beyond that already captured in other macroeconomic variables.

Why are the Effects of Recent Oil Price Shocks so Small

Recent oil price shocks have relatively small effects on real economic activity and inflation compared to the experiences of the seventies and the early eighties. In this paper we analyse possible reasons for these phenomena using the example of the German economy. At first, by estimating a VAR-model and calculating impulse responses to an oil price shock it is confirmed that the macroeconomic effects have become much smaller. Moreover, our simulations show that oil price hikes are more closely related to global economic activity since the early nineties.Then, to get a deeper understanding of the structural changes which are responsible for these results we utilize a new Keynesian open economy model. It becomes obvious that the small effects of the recent oil price shocks on the German economy can be explained by a combination of a reduced energy cost share and good luck in terms of a strong growing global economy. Hence, if global economic growth decreases, pure oil price shocks may still have substantial effects on the German economy, even if the energy pricevulnerability has been reduced.These results should be valid also for other oil importing countries, at least from a qualitative point of view.

Effects of Oil Price Shocks on German Business Cycles

In this paper we analyse to what extent movements in oil prices can help to explain business cycle fluctuations in Germany.We proceed in several steps:As a starting point we use a standard real business cycle model for the German economy and introduce energy as an additional factor in the production function. As in Kim/Loungani (1992) our finding is that oil price shocks increase the volatility of output but only to a limited extent.We therefore continue by using a real business cycle model for a small open economy and again include energy use in the production function (de Miguel et al. 2003).But compared to our previous model we could only find an additional increase in volatility of output under certain conditions. Subsequently,we use these models to analyse whether the impact of oil price movements has changed over time by splitting our data set into two subsamples: the first from 1970 to 1986 and the second from 1987 to 2002.The main results suggest that the reduced importance of energy for industrial production substantially decreases the vulnerability of the German economy with regard to oil price shocks.