Arbeitspapier
Uncertainty and the real economy: Evidence from Denmark
We construct an index for economic policy uncertainty in Denmark using articles in Denmark's largest financial newspaper. We adapt a Latent Dirichlet Allocation (LDA) model to sort articles into topics. We combine article-specific topic weights with the occurrence of words describing uncertainty to construct our index. We then incorporate the index in a structural VAR model of the Danish economy and find that uncertainty is a robust predictor of investments and employment. According to our model, increased uncertainty contributed significantly to the drop in investments during the Sovereign Debt Crisis. Conversely, uncertainty has so far had a smaller, but still significant, impact on investments during the COVID-19 pandemic.
- Language
-
Englisch
- Bibliographic citation
-
Series: Danmarks Nationalbank Working Papers ; No. 165
- Classification
-
Wirtschaft
Information, Knowledge, and Uncertainty: General
General Outlook and Conditions
- Subject
-
Economic activity and employment
Current economic and monetary trends
Statistical method
- Event
-
Geistige Schöpfung
- (who)
-
Bess, Mikkel
Grenestam, Erik
Tang-Andersen Martinello, Alessandro
Pedersen, Jesper
- Event
-
Veröffentlichung
- (who)
-
Danmarks Nationalbank
- (where)
-
Copenhagen
- (when)
-
2020
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Bess, Mikkel
- Grenestam, Erik
- Tang-Andersen Martinello, Alessandro
- Pedersen, Jesper
- Danmarks Nationalbank
Time of origin
- 2020
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