Seismonomics: Listening to the Heartbeat of the Economy

Abstract

Seismic sensors continuously record a wide range of ground vibrations that are not necessarily related to earthquake activity, but are rather caused by human activity such as industrial processes, urban and air traffic. In this paper we show that human-generated seismic noise provides valuable information about the economic developments of a particular area, thus offering policymakers a useful tool for monitoring the heartbeat of that economy. We adopt a set of techniques developed within the seismic literature to disentangle sources of ground motion and propose a novel, daily indicator measuring vibrations caused by human activity. To demonstrate the usefulness of our procedure, we collect a huge data set made of nearly 20 years of continuously recorded seismic data in Beijing, China, and use our vibration indicator to forecast daily variations in regional industrial production. Our findings suggest that seismic data closely tracks business cycle fluctuations, with significant enhancements in the forecasting performance during economic crises. Our results support the usefulness of seismology as a nowcasting and forecasting tool in the area of economics and business, particularly for monitoring regional economies, for which timely and up-to-date indicators of economic activity are often not available, or for tracking national economies in periods of disruption of many key statistics.