Australia Monthly Index
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We are pleased to introduce a new Economic Policy Uncertainty Index for Australia that runs from January 1998 to the present.
News coverage about policy-related economic uncertainty
We construct the Economic Policy Uncertainty Index for Australia in the same manner as our newspaper-based EPU Index for the United States, following the methods in "Measuring Economic Policy Uncertainty" by Baker, Bloom and Davis. We use text archives for eight Australian newspapers from January 1998 onwards: Daily Telegraph, Courier Mail, The Australian, The Age, The Advertiser, Mercury, Sydney Morning Herald, and The Herald Sun (from November 1999). For each paper, we count the number of articles containing the terms "uncertain" or "uncertainty", "economic" or "economy", and one or more policy-relevant terms: regulation, "Reserve Bank of Australia", RBA, deficit, tax, taxation, taxes, parliament, senate, "cash rate", legislation, tariff, war.
To obtain the EPU rate for each paper, we scale the raw EPU counts by the number of all articles in the same newspaper and month. To construct the overall EPU Index for Australia, we first standardize each paper's EPU rate to unit standard deviation from 1998 (or first month) through 2012. Using these standardized series, we average across papers by month and then multiplicatively rescale the resulting series to a mean of 100 from January 1998 to December 2012.
We thank Jeff Borland, Renee McKibbin, James Morley, Adrian Pagan and Tim Robinson for helpful comments on a preliminary version of our EPU Index for Australia.