Eye in the Sky: Private Satellites and Government Macro Data

HKUST IEMS Thought Leadership Briefs No. 43

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Abhiroop Mukherjee, George Panayotov, and Janghoon Shon

Relying on government announcements for macro information creates a potential conflict of interest and macro uncertainty. Many private entities have started using alternative data strategies to predict macro numbers. If alternative data strategies can work for macro predictions, we can get a sense of what is happening in the economy without having to rely on the government to inform us. We find a reduction in implied volatility and in price jumps in the U.S. crude oil market as a result of satellite-based inventory estimates. These findings point to a future in which the resolution of macro uncertainty is smoother, and governments have less control over macro information.

See the Working Paper on which this Thought Leadership Brief is based.  The paper is granted the CFAM-ARX Best Paper Award. The award is jointly sponsored by the Asia-Pacific Research Exchange of the CFA Institute (ARX) and the CFA Society of Melbourne (CFAM).  Find out more about the award from this HKUST Business School eNews

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