HKUST IEMS Working Papers No. 2019-68
We develop an approach to identify whether recent technological advancements – such as the rise of commercial satellite-based macroeconomic estimates – can provide an effective alternative to government data. We measure the extent to which satellite estimates are affecting the value of government macro news using the asset price impact of scheduled announcements. Our identification relies on cloud cover, which prevents satellites from observing economic activity at a few key hubs. Applying our approach, we find that some satellite estimates are now so effective that markets are no longer surprised by government announcements. Our results point to a future in which the resolution of macro uncertainty is smoother, and governments have less control over macro information.
Accepted for publication at the Journal of Financial Economics.
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