Nowcasting Chilean Household Consumption With Electronic Payment Data — Banco Central de Chile's Pandemic-Era Model

When the COVID-19 shock hit, Chile's official household consumption statistics were too slow to show policymakers what was happening to spending in real time, while electronic card-payment data is captured with virtually no lag.

In Working Paper No. 931, Banco Central de Chile economist Marcus P. A. Cobb tested nowcasting models built from this electronic payment data against the bank's standard nowcasting methods, tracking household consumption through the pandemic period.

The paper found that payment data captured real-time swings in spending during the shock, and that simple models relying solely on electronic payment data could produce further nowcasting-accuracy gains once each economic sector in the payment data was assigned appropriate representativity weighting.

This is a research working paper testing a novel real-time data source, not a confirmed component of the bank's standing operational nowcasting production system; its documented value is greatest during acute shocks, when traditional indicators lag most.

Read the full analysis: https://www.bcentral.cl/en/content/-/details/working-papers-n-931