Twitter Can Be A Tool To Predict Inflation: Bank Of Italy

A research paper by Bank of Italy analysts highlights the possibility of using the messages published on the social network to predict inflation expectations.

Market operators are back to talk about inflation, especially because of the possible effects linked to the expansionary fiscal and monetary policies implemented to counter the pandemic. How is it possible to keep price trends under control? By means of Twitter Inc TWTR, according to the Bank of Italy.

A Tool For Gauging Expectations: Using the messages published by the users of the social media platform, Twitter can also represent a complementary tool for gauging inflation expectations; this is the idea expressed by Bank of Italy analysts Cristina Angelico, Juri Marcucci, Marcello Miccoli, and Filippo Quarta, who studied algorithms for large volumes of data in a paper, highlighting that correlation.

Predictive Power: According to the Bank of Italy analysts, these indicators have a higher monthly survey-based predictive power of inflation expectations than that of other available information sources as they represent a real-time complementary indicator.

Daily Metrics: The study focuses on consumer inflation expectations by browsing metrics built with cutting-edge machine learning and textual analysis techniques based on the messages posted by Twitter users.

This article originally appeared on Financialounge.com and was translated from Italian to English. It does not represent the opinion of Benzinga and has not been edited.

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