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Economic Policy Uncertainty (EPU) in Emerging Countries: The Case of Tunisia

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  • Belhoula, Mohamed Malek

Abstract

Purpose: I aim to develop the first Economic Policy Uncertainty (EPU) indices for Tunisia covering the period from 2012 to 2022, using a methodology adapted from Baker et al. (2016). These indices assess the frequency of relevant terms in major Tunisian newspapers to gauge the level of economic policy uncertainty. Additionally, I investigate the impact of EPU on economic activity.Design/Methodology/Approach: This study employs a textual analysis methodology and a Web-scraping algorithm to compute the news-based EPU indices. Additionally, using a VAR (Vector Autoregression) methodology and impulse response functions, the study examines the dynamic relationship between EPU and key macroeconomic variables, including GDP, consumption, industrial production, and the unemployment rate.Findings:& The results reveal that increases in EPU significantly predict declines in GDP, consumption, and industrial production, while positively correlating with the unemployment rate. Furthermore, monetary policy uncertainty emerges as the most influential factor contributing to EPU.Implications/Originality/Value: These findings underscore the importance of clear and consistent policy frameworks in mitigate uncertainty and enhancing economic performance in emerging economies like Tunisia.

Suggested Citation

  • Belhoula, Mohamed Malek, 2024. "Economic Policy Uncertainty (EPU) in Emerging Countries: The Case of Tunisia," Journal of Accounting and Finance in Emerging Economies, CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan, vol. 10(2), pages 127-138, June.
    • Handle: RePEc:src:jafeec:v:10:y:2024:i:2:p:127-138
    DOI: http://doi.org/10.26710/jafee.v10i2.2972
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