Climate change and Japanese economic policy uncertainty: Asymmetric analysis

Japan has always formulated various corresponding policies in response to climate change. This paper explores the asymmetric impact of climate change on Japan's economic policy uncertainty (JEPU) by comparing text-based indicators (climate policy uncertainty, CPU) and physical indicators (El Nin & SIM;o Southern Oscillation, ENSO). The asymmetric Granger test finds that CPU has no significant impact on JEPU. However, positive ENSO shocks can lead to an increase in JEPU. Different ENSO shocks may differently drive JEPU in all runs. Thus, this kind of text-based indicator may not be appropriate when exploring the impact of climate change on Japanese economic policy.