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The Macroeconomic Effects of Economic Policy Uncertainty in Peru: Evidence from a News-Based Index

Author

Listed:
  • Luis Gonzalo Llosa

    (Banco Central de Reserva del Perú
    Universidad del Pacífico)

  • Sergio Serván

    (Banco Central de Reserva del Perú)

  • Jeanpierre Flores

    (Banco Central de Reserva del Perú)

Abstract

This paper presents a new Economic Policy Uncertainty (EPU) index for Peru that spans from 2009 to 2025. The index captures major political and economic events in Peru’s recent history. Using vector auto-regressive models (VAR), we show that uncertainty shocks are recessionary. We find that these shocks lead to declines in aggregate output as well as currency depreciation and lower short-term interest rates in domestic currency. These results suggest that the EPU index provides a useful tool for policymakers and researchers to monitor and analyze the economic impacts of uncertainty in Peru.

Suggested Citation

  • Luis Gonzalo Llosa & Sergio Serván & Jeanpierre Flores, 2026. "The Macroeconomic Effects of Economic Policy Uncertainty in Peru: Evidence from a News-Based Index," Working Papers 2026-002, Banco Central de Reserva del Perú.
    • Handle: RePEc:rbp:wpaper:dt-2026-002
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    Keywords

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    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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