Eye in the Sky: Private Satellites and Government Macro Data

59 Pages Posted: 12 Sep 2019 Last revised: 24 Feb 2020

See all articles by Abhiroop Mukherjee

Abhiroop Mukherjee

Hong Kong University of Science & Technology (HKUST) - Department of Finance

George Panayotov

Hong Kong University of Science & Technology (HKUST)

Janghoon Shon

Hong Kong University of Science & Technology (HKUST) - Department of Finance

Date Written: December 15, 2019

Abstract

We develop an approach to identify whether recent technological advancements -- such as the rise of commercial satellite-based macro estimates -- can provide an alternative to government data. We measure the extent to which satellite estimates affect the value of a government macro announcement using its asset price impact. 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.

Keywords: Alternative data, Satellite imagery, Asset price impact, Macroeconomic estimates

JEL Classification: G14, E44

Suggested Citation

Mukherjee, Abhiroop and Panayotov, George and Shon, Janghoon, Eye in the Sky: Private Satellites and Government Macro Data (December 15, 2019). Journal of Financial Economics (JFE), Forthcoming, HKUST IEMS Working Paper No. 2019-68, Available at SSRN: https://ssrn.com/abstract=3446701 or http://dx.doi.org/10.2139/ssrn.3446701

Abhiroop Mukherjee

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong

George Panayotov (Contact Author)

Hong Kong University of Science & Technology (HKUST) ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong
852-2358-5049 (Phone)
852-2358-1749 (Fax)

Janghoon Shon

Hong Kong University of Science & Technology (HKUST) - Department of Finance ( email )

Clear Water Bay, Kowloon
Hong Kong
852-67567630 (Phone)

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