Economic theory suggests that uncertainty affects economic activity, but uncertainty is often difficult to measure. Danmarks Nationalbank has in collaboration with Dagbladet Børsen conducted an index which measures the degree of economic policy uncertainty in Denmark.
Danmarks Nationalbank’s economists apply a set of statistical tools to assess the content of the articles. First, the relevance of the article to the assessment of the economy is evaluated. Then the article’s use of selected words or phrases related to uncertainty is computed. By aggregating these computations over time, it is possible to create an index of the level of uncertainty in the Danish economy.