The economic policy uncertainty index is nonsense
Jim Tankersley has been doing the Lords work by following up on questionable arguments people have made about our current economic weakness being something other than a demand crisis. First, he asked Alberto Alesina about how all that expansionary austerity is working out from the vantage point of this year. Now he looks at the Economic Policy Uncertainty (EPU) index (Baker, Bloom, Davis) as it stands halfway into 2013.
And it has collapsed. The EPU index has been falling at rapid speeds, hitting 2008 levels. Yet the recovery doesnt seem to be speeding up at all. Wasnt that supposed to happen?
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