Economic Analysis

Monthly HKKS Uncertainty Indices for Greece

Uncertainty Indices for Greece


G. Hardouvelis, G. Karalas, D. Karanastasis and P. Samartzis (HKKS)

Data for the overall EPU index for Greece and each category-level index are available here as well as in  The indices are updated on a monthly basis.

For additional information, see their paper titled Economic Policy Uncertainty, Political Uncertainty and the Greek Economic Crisis.


The Economic Policy Uncertainty (EPU) index for Greece and all the remaining nine uncertainty indices that we describe below, are derived from subsets of articles in a universe of over half a million articles published from January 1998 up to the most recent month in four widely circulated Greek newspapers:

  • “To Vima,”
  • “Ta Nea,”
  • “Naftemporiki,”
  • “Kathimerini”

The articles are obtained from the internet web pages of the aforementioned newspapers. The indices are updated on a monthly basis by the HKKS group of four researchers (G. Hardouvelis, G. Karalas, D. Karanastasis and P. Samartzis).  Construction of the indices follows the methodology of Baker, Bloom and Davis (Quarterly Journal of Economics (2016)).

The following indices are constructed:

  1. EPU Economic Policy Uncertainty
  2. EU Economic Uncertainty
  3. POLU Political Uncertainty
  4. EPUM Monetary Policy Uncertainty
  5. EPUF Fiscal Policy Uncertainty
  6. EPUD Public Debt uncertainty
  7. EPUT Tax Uncertainty
  8. EPUC Currency Uncertainty
  9. EPUB Banking Uncertainty
  10. EPUP Pension Uncertainty

Index Construction

i) The construction process of the first and major index, the Economic Policy Uncertainty (EPU) index is as follows: A monthly count of articles per newspaper is first recorded, with each article containing at least one term from each of the following three categories pertaining to (1) uncertainty, (2) the economy and (3) policy:

Groups (1), (2) and (3) key words for EPU

(1) Uncertainty – uncertainty (“αβεβαιότητα”), vagueness (“ασάφεια”), doubt (“αμφιβολία”), concern (“ανησυχία”).

(2) Economy – economy (“οικονομία”, “οικονομικό”).

(3) Policy – Parliament (“βουλή”), legislation (“νομοθεσία”, “νομοθετικό”), government (“κυβέρνηση”), Bank of Greece (“Tράπεζα της Eλλάδος”), central bank (“κεντρική τράπεζα”), reform (“μεταρρύθμιση”) structural changes (“διαρθρωτικές αλλαγές”), law (“νόμος”), minister (“υπουργείο”, “υπουργός”), prime minister (“πρωθυπουργός”), Maximos Mansion (“Μαξίμου”), deficit (“έλλειμμα”, “ελλειμματικό”), deregulation (“απορύθμιση”), regulatory framework (“ρυθμιστικό πλαίσιο”, “κανονιστικό πλαίσιο”), Capital Market Commission (“Επιτροπή Κεφαλαιαγοράς”), Competition Commission (“Επιτροπή Ανταγωνισμού”), Council of State (“συμβούλιο της επικρατείας”).

To mitigate the effect of the varying volumes of articles across the newspapers and over time, the raw monthly counts are first scaled by the total number of articles in the same newspaper and month. Subsequently, the scaled monthly count series of each newspaper is standardized by dividing it by its own standard deviation over the monthly sample from January 1998 to December 2017. Finally, the standardized scaled series are averaged across the four newspapers, creating a single monthly time series, which is then normalized to have a mean of 100 over the sample from January 1998 to December 2017.

In the Greek language, words appear in different tenses, different declensions and sometimes in abbreviated form. All forms are used for the construction of the indices.

The accompanying EPU graph (in pdf form) shows that the peaks of the Greek EPU index capture major global events of the past, including the 9/11 attacks, the second Iraq War, or the outburst of the Global Financial Crisis after the bankruptcy of Lehman Brothers. It also captures significant local events such as the 2010 Greek bailout request, the 2012 & 2015 Greek elections, the planned but not realized 2011 Greek referendum and the 2015 Greek referendum. Its level is higher in the second half of the sample, a period characterized by the consecutive international and Greek crises.

ii) A second index, the Economic Uncertainty (EU) index is based on articles containing at least one term from the previously tabulated groups (1) on uncertainty and (2) on the economy. Construction of the EU index follows the same methodology described above for the EPU index.

The EU index has a high correlation with the EPU index. This is because the set of articles on which EPU is based on, is a subset of the set of articles used to construct EU.

iii) A third index, the Political Uncertainty (POLU) index is created by using terms pertaining to (1) uncertainty and a second group of words more specific to politics (P).  Group (1) is exactly the same as described earlier for EPU.

The second group (P) key words for POLU

(P) Politics –  ballot box (“κάλπη”), elections (“εκλογές”), party (“κόμμα”), absolute majority (“αυτοδυναμία”), no government formation (“ακυβερνησία”), proportional voting (“αναλογική”), parliamentary voting (“δεδηλωμένη”), parliament (“βουλή”), plenary session (“ολομέλεια”), political uncertainty (“πολιτική αβεβαιότητα”), political instability (“πολιτική αστάθεια”), political crisis (“πολιτική κρίση”), political deadlock (“πολιτικό αδιέξοδο”), political developments (“πολιτικές εξελίξεις”), political landscape (“πολιτικό τοπίο” or “πολιτικό σκηνικό”), government (“κυβέρνηση”), government coalition (“συμπολίτευση” or “συγκυβέρνηση”), parliamentary vote (“ψηφοφορία στη βουλή”), reshuffle (“ανασχηματισμός”), polls (“δημοσκοπήσεις”)

POLU and EPU are positively correlated.  One reason is the fact that they share the same group (1) of uncertainty key words in their definitions. Observe that political uncertainty was also a significant feature of the crisis in Greece, driven by intense political polarization.

iv) The remaining seven indices are sub-indices of the EPU index. EPU sub-indices are created by adding a fourth criterion to the articles, which already satisfy the conditions for inclusion in EPU. Hence each sub-index is based on fewer articles than the articles that make up EPU, those containing at least one term from groups (1) on uncertainty, (2) on the economy and (3) on policy, and (4) another fourth group, specific to each sub-index. The chosen words follow similar words chosen by earlier authors in the construction of similar sub-indices in the US and Japan.

Five major sub-indices are constructed:

  • Monetary Policy Uncertainty (EPUM),
  • Fiscal Policy uncertainty (EPUF),
  • Currency Uncertainty (EPUC),
  • Banking Uncertainty (EPUB)
  • Pension Uncertainty (EPUP).

In addition, the EPUF group of keywords is further partitioned into two subsets, which are then utilized to make up the sub-indices of

  • Tax Uncertainty (EPUT)
  • and Public Debt Uncertainty (EPUD).

Group (4) key words by category of EPU sub-index

EPUM  –  interest rate (“επιτόκιo”, “euribor”) cost of money (“κόστος χρήματος”), monetary policy (“νομισματική πολιτική”), quantitative easing (“ποσοτική χαλάρωση”).

EPUT – tax (“φορολογία”, “φόρος”) value added tax (“φ.π.α.”), special consumption tax (“ειδικός φόρος κατανάλωσης”), public revenues (“τακτικά έσοδα”, “δημόσια έσοδα”, “έσοδα προϋπολογισμού”), privatization revenues (“έσοδα αποκρατικοποιήσεων“), tax office or authority (“εφορία“).

EPUD  – government spending (“δημόσιες δαπάνες”, “δαπάνες δημοσίου”, “κρατικές δαπάνες”, “δαπάνη γενικής κυβέρνησης”), primary spending (“πρωτογενής δαπάνη”), defense spending (“εξοπλιστική δαπάνη”), public investment (“δημόσια επένδυση”), budget (“προϋπολογισμός”), sovereign debt (“κρατικό χρέος”), public debt (“δημόσιο χρέος”, “οφειλές δημοσίου”), transfer payments (“μεταβιβαστικές πληρωμές”), public consumption (“δημόσια κατανάλωση”), public benefit or allowance (“επιχορήγηση”,”επίδομα”), country default (“πτώχευση της χώρας”, “πτώχευση της Ελλάδας”, “χρεοκοπίας της χώρας”, “χρεοκοπία της Ελλάδας”).

EPUF   – the union of key words in the previous two groups EPUT, EPUD

EPUC   – exchange rate (“συναλλαγματική ισοτιμία”, “ισοτιμία του ευρώ”), drachma (“δραχμή”), Eurozone (“ζώνη του ευρώ”, “ευρωζώνη”), currency appreciation (“ανατίμηση”), currency depreciation (“υποτίμηση”), national currency (“εθνικό νόμισμα”), economic and monetary union (“οικονομική νομισματική ένωση”), Grexit (“grexit”, “έξοδος από το ευρώ”).

EPUB – bank (“τράπεζα”), banking system (“τραπεζικό σύστημα”), banking sector (“τραπεζικός κλάδος”, “τραπεζικός τομέας”), “), loan (“δάνειο”), deposits (“καταθέσεις”), interbank market (“διατραπεζική αγορά”), lending rate (“επιτόκιο χορηγήσεων”), deposit rate (“επιτόκιο καταθέσεων”).

EPUP – pension (“σύνταξη”), lump sum pension (“εφάπαξ”), pension insurance system (“ασφαλιστικό σύστημα”, “το ασφαλιστικό”), insurance fund (“ασφαλιστικό ταμείο”), Social Insurance Institute (“ίδρυμα κοινωνικών ασφαλίσεων”), social insurance (“κοινωνική ασφάλιση”), zero deficit clause (“ρήτρα μηδενικού ελλείμματος”), pension reform (“ασφαλιστική μεταρρύθμιση”), insurance contribution (“ασφαλιστική εισφορά”), funded pension scheme (“κεφαλαιοποιητικό σύστημα”), pay as you go pension scheme (“διανεμητικό σύστημα”).

Finally, as noted earlier, Greek words appear in texts in different tenses, different declensions and sometimes in abbreviated form.  All forms are used in the count with the exception of the word “δραχμή” (meaning “drachma”), which is used only in its singular tense when constructing EPUC, as its plural tense denotes unit of account and would not necessarily be related to currency uncertainty.