Trade Policy Uncertainty (TPU) Index

The Trade Policy Uncertainty (TPU) Index measures uncertainty related specifically to international trade policies, such as tariffs, trade wars, sanctions, or changes in trade agreements.

It indicates how uncertain businesses and investors feel about future trade rules.

The TPU index is based on the broader Economic Policy Uncertainty research framework developed by economists:

• Scott Baker
• Nicholas Bloom
• Steven Davis

How It Is Calculated?

The TPU index is constructed mainly using:

1. Newspaper articles analysis
2. Counting how often terms related to:
   • “trade”
   • “tariff”
   • “protectionism”
   • “trade policy uncertainty”
     appear in major newspapers.

More mentions = higher uncertainty.

What Causes High TPU?

TPU rises when there are events such as:

• Trade wars
• Tariff increases
• Sanctions
• Withdrawal from trade agreements
• Export restrictions

Why TPU Matters?

High TPU can cause:

• Decline in international trade
• Delayed investments by firms
• Disruptions in global supply chains
• Slower global economic growth

Global Economic Policy Uncertainty (GEPU) Index

The Global Economic Policy Uncertainty (GEPU) Index measures overall uncertainty in economic policies worldwide.

It includes uncertainty about:

• Fiscal policy
• Monetary policy
• Trade policy
• Regulatory policy
• Political decisions affecting the economy

Developed By

The GEPU index is also developed by:

• Scott Baker
• Nicholas Bloom
• Steven Davis

The index is created using three main components:

1. Media coverage of economic policy uncertainty
2. Economic forecast disagreements
3. Frequency of temporary tax provisions

It aggregates data from multiple major economies around the world.

Events That Increase GEPU

The GEPU index rises during major global shocks such as:

• Global financial crises
• Wars and geopolitical tensions
• Pandemics
• Major elections
• Trade conflicts

For example, GEPU surged during:

• Global Financial Crisis (2008)
• COVID-19 pandemic

Difference Between TPU and GEPU