A Global Measure of Uncertain Economic Times

Uncertainty about a nation’s economic policies can influence both politics and financial markets, and the effects often spread beyond the country’s borders. Building on his research with Northwestern’s Scott R. Baker and Stanford’s Nick Bloom measuring policy uncertainty in the world’s major economies, Chicago Booth’s Steven J. Davis has constructed an index that combines data from 18 countries to provide a global measurement of uncertainty from 1997 to present. Starting with each country’s index, which mines local news reports for keywords that indicate a level of concern from businesses and households about economic policy, Davis assembles a GDP-weighted average that shows how worldwide qualms have intensified over the past decade. The research team keeps the indexes up to date at policyuncertainty.com, where they expect to add data from more countries, including Israel, Malaysia, Mexico, and New Zealand.