Policy uncertainty in Scandinavian countries

Emil Johan Verlo Ifwarsson, Lars Erik Kleiven, Lars H. Sendstad and Verena Hagspiel

Economics Letters, 2021, vol. 209, issue C

Abstract: We measure policy uncertainty for three small open economies and show how policy uncertainty indices can capture important historical events, both local events such as referendums and certain general elections, as well as global events such as financial crises. By employing the methodology of Baker et al. (2016), we construct indices for the three Scandinavian countries: Norway, Denmark and Sweden. We find that increased policy uncertainty both at home and in the world’s largest economy, the US, leads to economic contraction, including a significant decline in stock markets and GDP and a long-lasting reduction in the Scandinavian countries’ Purchasing Managers’ Index.

Keywords: Economic uncertainty; Policy uncertainty; Uncertainty shocks; Small open economy (search for similar items in EconPapers)
JEL-codes: D80 E66 F41 F42 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:209:y:2021:i:c:s0165176521003980

DOI: 10.1016/j.econlet.2021.110121

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