If you’ve been following international news over the past decade or so, you’ve seen the European Union’s seemingly continuous struggle to define the various facets of its economic policy. Such policy uncertainty has effects on economic activity—especially investment. And we can quantify such uncertainty, as shown in the graph above, thanks to the work of Scott Baker, Nicholas Bloom, and Steve Davis. Their work is based on the frequency of certain key words in newspapers and disagreements among economic forecasters. The graph pertains to Germany, the U.K., France, Italy, and Spain and definitely shows elevated levels of policy uncertainty since 2012, which rival and even exceed the levels during the financial crisis in 2007-08.

How this graph was created: Search for “economic policy uncertainty” and select the series for Europe (among several other uncertainty series available in FRED).

Suggested by Christian Zimmermann