Measuring Economic Policy Uncertainty

@inproceedings{Baker2015MeasuringEP,
  title={Measuring Economic Policy Uncertainty},
  author={Scott Ross Baker and Nicholas Bloom and Steven M. Davis},
  year={2015}
}
We develop a new index of economic policy uncertainty (EPU) based on newspaper coverage frequency. Several types of evidence—including human readings of 12,000 newspaper articles—indicate that our index proxies for movements in policy-related economic uncertainty. Our U.S. index spikes near tight presidential elections, Gulf Wars I and II, the 9/11 attacks, the failure of Lehman Brothers, the 2011 debt ceiling dispute, and other major battles over fiscal policy. Using firm-level data, we find… CONTINUE READING

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