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Syed, Syed, and Ahmad MPU Index for Pakistan

Download Data                   Pakistan Monetary EPU Chart

Following Baker, Bloom, and Davis (2016) who pioneered the methodology of constructing a news-based measure of uncertainty, Syed, Syed, and Ahmad (2025) have constructed the monetary policy uncertainty (MPU) index for Pakistan. Monetary policy uncertainty measures level of uncertainty related to monetary policy, regulations, and government actions that affect money and credit impacting households, firms, investors, and the economy. The two variants of MPU for Pakistan are as follows:

  • MPU-2: This index is based on frequency count in two leading newspapers (Business Recorder and Express Tribune) available from August 2010.
  • MPU-4: This index is based on frequency count in four leading newspapers (Business Recorder, Express Tribune, DAWN, and the News) available from January 2015.

To construct their MPU-2 and MPU-4 index, they first obtain monthly counts of articles for each newspaper that contain one or more terms in each of the following sets (sets in parentheses): ("economic" or "economy") and ("parliament" or "legislation" or "senate" or "regulation" or "state bank of Pakistan" or "SBP" or "deficit" or "fiscal dominance") and ("uncertain$") and ("state bank of Pakistan" or "SBP" or "money supply" or "open market operations" or "monetary policy" or "SBP target policy rate" or "SBP policy rate" or "policy rate" or "weighted average overnight repo rate" or "central bank" or "interest rates" or "SBP governor" or "governor SBP" or "lender of last resort" or "discount window" or "Federal Reserve" or "tapering" or "quantitative easing" or "forward guidance" or "inflation expectation$")

After obtaining raw counts of articles, they scale by total number of articles published in the same newspaper and month. Next, they standardize each newspaper's scaled frequency counts to have a unit standard deviation from August 2010 to March 2025 (for MPU-2) and from January 2015 to March 2025 (for MPU-4) and then compute the simple average across newspapers by month. Finally, they multiplicatively normalize the series to have a mean value of 100 for the respective time periods of MPU-2 and MPU-4.

The data should be cited as: Syed, A. A. S., Syed, K. H. B., and Ahmad, K. (2025). Measuring Monetary Policy Index for Pakistan. https://doi.org/10.2139/ssrn.5392688