The Macroeconomic Effects of Economic Policy Uncertainty in Peru: Evidence from a News-Based Index

Luis Gonzalo Llosa, Sergio Serván and Jeanpierre Flores
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Luis Gonzalo Llosa: Banco Central de Reserva del Perú
Sergio Serván: Banco Central de Reserva del Perú
Jeanpierre Flores: Banco Central de Reserva del Perú

No 2026-002, Working Papers from Banco Central de Reserva del Perú

Abstract: This paper presents a new Economic Policy Uncertainty (EPU) index for Peru that spans from 2009 to 2025. The index captures major political and economic events in Peru’s recent history. Using vector auto-regressive models (VAR), we show that uncertainty shocks are recessionary. We find that these shocks lead to declines in aggregate output as well as currency depreciation and lower short-term interest rates in domestic currency. These results suggest that the EPU index provides a useful tool for policymakers and researchers to monitor and analyze the economic impacts of uncertainty in Peru.

Keywords: Economic Policy Uncertainty; Peru; business cycles; fluctuations (search for similar items in EconPapers)
JEL-codes: D80 E22 O54 (search for similar items in EconPapers)
Date: 2026-04
New Economics Papers: this item is included in nep-min
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