Bank of Italy tracks Tweets to gauge public opinion and make inflation predictions

Could the “Twittersphere” tell us more about the cost of living and household spending than some of our top economists? That seems to be what the Bank of Italy is suggesting.

The European Union’s third largest economy, among the worst hit in Europe by the novel coronavirus disease crisis, is making plans for the post-pandemic era. Italy is poised to be one of the largest recipients of the bloc’s 900-billion-dollar recovery fund. As such, it has never been more crucial for policymakers to gauge public mood on issues such as shop prices and the cost of living.

Now, the Italian central bank says it has devised a set of experimental indicators created from the content of millions of tweets, which examine what views people are sharing online about the economy and the future outlook. It is hoped the findings of the study may offer scope for setting monetary policy even including influencing the direction of interest rates.

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