MarketPlace:
Now we can measure economic policy uncertainty
12 July 2017
In the world of business and economics, there’s a bit of a fixation on uncertainty. To start, there's the VIX, a measure of investor fear, that tracks expected volatility in the markets. But there’s another index out there, one that might be less familiar. It's called the Economic Policy Uncertainty Index, and it provides clues about how politics might be shaping the economy. Scott Baker from the Kellogg School of Management at Northwestern University developed the index along with Nicholas Bloom at Stanford University and Steven Davis at the University of Chicago. At the time they began working on it, in the years after the Great Recession, "there wasn't something that highlighted the role the government played in generating or driving uncertainty," Baker said.
Related publications
'Measuring Economic Policy Uncertainty', Scott R. Baker, Nicholas Bloom, Steven J. Davis, The Quarterly Journal of Economics, Vol 131, Issue 4, November 2016
Fluctuations in Uncertainty, Nicholas Bloom, Centre for Economic Performance Occasional Paper No.38, December 2013
Economic Recovery and Policy Uncertainty Scott R. Baker, Nick Bloom, Steven J. Davis and John Van Reenen, CEP US Election Analysis Paper No.2, October 2012
Policy Uncertainty: A New Indicator, Scott. R. Baker, Nicholas Bloom and Steven J. Davis. Article in CentrePiece Volume 16, Issue 3, Winter 2012