The Unassuming Economist

Economists Christian Gayer and Andreas Reuter of the European Commission (EC) and Fiona Morice of the French National Institute of Statistics and Economic Studies write about the EC’s new index of uncertainty in a recent column for the VoxEU blog.

For the lack of a better indicator, economists have often resorted to measuring uncertainty using proxies like deviation of agents’ views on economic outlooks or forecast errors. However, this new index aims to study the evolution of uncertainty in response to the Covid-19 pandemic and related stringent restrictions based on the EU-wide Programme of Business and Consumer Surveys. It also compares the indicator to survey-based indicators of economic confidence, as well as to other existing uncertainty gauges, and offers a glimpse of the rich set of geographical, sectoral, and sub-sectoral breakdowns of the new data.

The column dives deeper into the levels of analysis possible using disaggregated data on various parameters that it presents, such as at the industrial and sub-sectoral level, for consumers grouped by several socio-economic categories etc., and then discusses some key insights.

Click here to read the full blog.