Policy uncertainty has remains high; does it matter for economic uncertainty?<\/p>\n
Figure 1:<\/strong>\u00a0EPU-trade category (blue, left scale), and Trade Policy Uncertainty index (red, right scale). Source: Baker, Bloom & Davis policyuncertainty.com, and Caldara et al. TPUD.<\/em><\/p>\n \u00a0<\/p>\n Figure 2:<\/strong>\u00a0EPU (blue, left scale), and centered 7 day moving average (red, right scale), SF Fed News Sentiment index (green). Source: policyuncertainty.com, SF Fed, and author\u2019s calculations.<\/em><\/p>\n \u00a0<\/p>\n Figure 3:<\/strong> EPU (legacy) (blue, left scale), Jurado, Ludvigson, Ng (JLN) macro uncertainty index (tan, right scale). NBER defined peak to trough recession dates shaded gray. Source: policyuncertainty.com, Ludvigson<\/a>, and NBER.\u00a0<\/em><\/p>\n \u00a0<\/p>\n Figure 4:<\/strong> EPU (legacy) (blue, left scale), Jurado, Ludvigson, Ng (JLN) financial uncertainty index (tan, right scale). NBER defined peak to trough recession dates shaded gray. Source: policyuncertainty.com, Ludvigson<\/a>, and NBER.\u00a0<\/em><\/p>\n In a bivariate setting, one rejects the null hypothesis that JLN Granger causes EPU, but one can not reject the null hypothesis that EPU causes JLN, at conventional levels.<\/p>\n As of April (the last available observation), the JLN-macro series was over one standard deviation above the mean. And JLN (AEJ-Macro<\/em>, 2021)<\/a> suggests that financial uncertainty is an exogenous determinant of the business cycle activity.<\/p>\n \u00a0<\/p>\n<\/p><\/div>\n![\"\"](\"https:\/\/econbrowser.com\/wp-content\/uploads\/2025\/07\/eputradetpud6.png\")
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