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Satellites turn “concrete”: tracking cement with satellite data and neural networks

Author

Listed:
  • d’Aspremont, Alexandre
  • Arous, Simon Ben
  • Bricongne, Jean-Charles
  • Lietti, Benjamin
  • Meunier, Baptiste
Abstract
This paper exploits daily infrared images taken from satellites to track economic activity in advanced and emerging countries. We first develop a framework to read, clean, and exploit satellite images. Our algorithm uses the laws of physics (Planck’s law) and machine learning to detect the heat produced by cement plants in activity. This allows us to monitor in real-time whether a cement plant is working. Using this information on around 500 plants, we construct a satellite-based index tracking activity. We show that using this satellite index outperforms benchmark models and alternative indicators for nowcasting the production of the cement industry as well as the activity in the construction sector. Comparing across methods, we find neural networks yields significantly more accurate predictions as they allow to exploit the granularity of our daily and plant-level data. Overall, we show that combining satellite images and machine learning allows to track economic activity accurately. JEL Classification: C51, C81, E23, E37

Suggested Citation

  • d’Aspremont, Alexandre & Arous, Simon Ben & Bricongne, Jean-Charles & Lietti, Benjamin & Meunier, Baptiste, 2024. "Satellites turn “concrete”: tracking cement with satellite data and neural networks," Working Paper Series 2900, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20242900
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    More about this item

    Keywords

    big data; construction; data science; high-frequency data; machine learning;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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