GREY RELATIONAL ANALYSIS OF ECONOMIC POLICY UNCERTAINTY IN SELECTED EUROPEAN UNION COUNTRIES

To estimate the mutual effect of economic policy among European countries, the correlation among economic policy uncertainty (EPU)indices of eight countries in European Union (EU) from March 2003 to January 2017 is studied by using grey relational analysis (GRA). The result shows that under the framework of European economic integration, grey relational degree of EPU of European countries are all above 0.8, which reflects a strong economic policy co-movement of EU countries. The EPU indices of the UK and France with large economic mass are hardly influenced by other countries, which indicate that the economic policy influences of the two countries are larger than those of other countries. Additionally, due to the influence of exiting from the EU, the UK exhibits the lowest and dramatically fluctuating economic policy correlation with the other countries in recent years.