Bank of Italy paper uses Twitter to track inflation expectations

Bank of Italy
The Bank of Italy
Photo: Aleksandrasana/Wikimedia Commons

A working paper published by the Bank of Italy presents a new method for tracking inflation expectations using posts on the social media network Twitter.

In Can we measure inflation expectations using Twitter?, Cristina Angelico et al use machine learning and textual data techniques to examine Italian users’ posts. The authors base their approach on combining two methods.

The first is Latent Dirichlet Allocation, a machine learning method that statistically estimates the topics of a set of

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