Measuring political instability at a high frequency

Niklas Benner, Boris Blagov and Maximilian W. Dirks

No 1186, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This study introduces the World Index of Political Instability (WIPI), a novel high-frequency measure that covers four dimensions of political instability in 182 countries, available from 1960 until 2024. Our measure is extracted from the curated texts of the Economist Intelligence Unit's Country Reports using text mining techniques, allowing us to track political instability on a high frequency while matching various established low-frequency proxies. We show that political instability has significant and negative short-run effects on the economy similar to a demand-side shock. In contrast to uncertainty shocks, the observed effects are not immediate but take up to one year until they materialize. The measured effects are stronger in low-income economies than in high-income economies and during recessionary periods.

Keywords: Political Instability; Business Cycle Fluctuation; Panel Local Projection; Text Mining (search for similar items in EconPapers)
JEL-codes: C23 C55 O43 Z18 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:338082

DOI: 10.4419/96973371

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