Eye in the Sky: Private Satellites and Government Macro Data

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