Uncertainty surrounding trade policy has become a key factor shaping the investment and production decisions of firms. While text-based measures such as the trade policy uncertainty (TPU) index are widely used to track...
Overview
From text to trouble: understanding the limits of text-derived trade policy uncertainty measures. Uncertainty surrounding trade policy has become a key factor shaping the investment and production decisions of firms. While text-based measures such as the trade policy uncertainty (TPU) index are widely used to track these developments, their readings can be misinterpreted when treated as direct measures of uncertainty shocks. Keyword-driven co-mentions might, for example, inflate the index in periods of heightened trade tensions. This box introduces an alternative text-based measure, construc
