Measuring Economic Uncertainty in Syria: An Approach to the Stochastic Volatility Model

This research aimed to propose an index that measures the degree of economic uncertainty in Syria. As it is a difficult situation to predict, the economic future's uncertainty may be a latent variable that drives random fluctuations in the variables of the economy. The index was estimated within Bayesian inference based on the Stochastic Volatility Model. The fact that volatility in economic uncertainty foreshadows output declines suggested that the economic uncertainty index could be used as an alternative measure of economic activity when these were not available at a high frequency (such as monthly GDP).