Can Google searches help nowcast and forecast unemployment rates in the Visegrad Group countries?

TL;DR

This study demonstrates that Google search data can significantly improve the accuracy of nowcasting and forecasting unemployment rates in the Visegrad Group countries, highlighting the value of online activity for macroeconomic predictions.

Contribution

The paper introduces a novel approach using Google search data to enhance unemployment rate predictions specifically in the Visegrad Group countries.

Findings

Google searches improve unemployment nowcasting accuracy

Search data enhances unemployment forecasting models

Effective use of online activity for macroeconomic predictions

Abstract

Online activity of the Internet users has been repeatedly shown to provide a rich information set for various research fields. We focus on the job-related searches on Google and their possible usefulness in the region of the Visegrad Group -- the Czech Republic, Hungary, Poland and Slovakia. Even for rather small economies, the online searches of their inhabitants can be successfully utilized for macroeconomic predictions. Specifically, we study the unemployment rates and their interconnection to the job-related searches. We show that the Google searches strongly enhance both nowcasting and forecasting models of the unemployment rates.