The economic impact of uncertainty about U.S. regulations of the energy sector

Xiaohan Ma and Zhoudan Xie

Economic Inquiry, 2025, vol. 63, issue 3, 985-1002

Abstract: This paper examines the economic impact of uncertainty surrounding U.S. regulatory policies of the energy sector. We first construct a monthly‐frequency measure of regulatory uncertainty related to oil and gas production using natural language processing on over 600,000 U.S. newspaper articles published from 1985 to 2021. We then conduct empirical analysis via structural VAR models with the constructed oil regulatory uncertainty index, oil market variables, and aggregate economic data. The impulse response functions suggest that an increase in oil regulatory uncertainty reduces oil production and drilling activity and negatively affects national and state‐level economic outcomes.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecinqu:v:63:y:2025:i:3:p:985-1002

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