Forecasting-Devaluation-Incidence

This project aims to forecast devaluation events in Latin American countries using Google Trends data in order to analyse a decision-making problem. The study employs panel data extracted from Google Trends, including keywords related to economic crisis, default, devaluation, dollar price, inflation, and exchange rate. The data consists of the quantity of searches on a weekly basis for these keywords in nine different countries in Latin America (Argentina, Bolivia, Brazil, Chile, Colombia, Paraguay, Peru, and Uruguay). Additionally, the currency price in terms of USD is extracted for each week and the percentage variation in the price is calculated. A cutoff of 7.5% is used to identify ”jump devaluations” exceeding the cutoff.