Uncertain Trends in Economic Policy Uncertainty

Nino Buliskeria, Jaromir Baxa and Tomáš Šestořád

No 2024/1, Working Papers IES from Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies

Abstract: The news-based Economic Policy Uncertainty indices (EPU) of Germany, France, and the United Kingdom display discernible trends that can be found neither in other European countries nor in other uncertainty indicators. Therefore, we replicate the EPU index of European countries and show that these trends are sensitive to the rather arbitrary choice of normalizing the raw counts of news related to economic policy uncertainty by the count of all newspaper articles. We show that an alternative normalization by news on economic policy leads to different long-term dynamics with less pronounced trends and markedly lower uncertainty during recent periods of uncertainty such as Brexit or the COVID-19 pandemic. Consequently, our results suggest that the effects of uncertainty related to these events on economic activity may have been overestimated.

Keywords: economic policy uncertainty; trend-cycle decomposition; reproducibility; reliability (search for similar items in EconPapers)
JEL-codes: D80 E32 E66 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2024-01, Revised 2024-01
New Economics Papers: this item is included in nep-eec, nep-eur and nep-mac
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Related works:
Working Paper: Uncertain Trends in Economic Policy Uncertainty (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fau:wpaper:wp2024_01

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