Narratives about the Macroeconomy

Peter Andre, Ingar Haaland (), Christopher Roth, Mirko Wiederholt () and Johannes Wohlfart ()
Additional contact information
Ingar Haaland: NHH Norwegian School of Economics
Mirko Wiederholt: Ludwig-Maximilians-Universität München
Johannes Wohlfart: Department of Economics and CEBI, University of Copenhagen, CESifo, and Danish Finance Institute

No 127, ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany

Abstract: We provide evidence on narratives about the macroeconomy—the stories people tell to explain macroeconomic phenomena—in the context of a historic surge in inflation. We measure economic narratives in open-ended survey responses and represent them as Directed Acyclic Graphs. We apply this approach in surveys with more than 10,000 US households and 100 academic experts and document three main findings. First, households’ narratives are strongly heterogeneous and coarser than experts’ narratives, focus more on the supply side than on the demand side, and often feature politically loaded explanations. Second, households’ narratives strongly shape their inflation expectations, which we demonstrate with descriptive survey data and a series of experiments. Third, an experiment varying news consumption shows that the media is an important source of narratives. Our findings demonstrate the relevance of narratives for understanding macroeconomic expectation formation.

Keywords: Narratives; Expectation Formation; Causal Reasoning; Inflation; Media; Attention (search for similar items in EconPapers)
Pages: 125 pages
Date: 2021-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

Downloads: (external link)
https://www.econtribute.de/RePEc/ajk/ajkdps/ECONtribute_127_2021.pdf Fourth version, 2024 (application/pdf)

Related works:
Working Paper: Narratives about the macroeconomy (2024)
Working Paper: Narratives about the Macroeconomy (2023)
Working Paper: Narratives about the Macroeconomy (2022)
Working Paper: Narratives about the Macroeconomy (2022)
Working Paper: Narratives about the Macroeconomy (2021)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ajk:ajkdps:127

Access Statistics for this paper

More papers in ECONtribute Discussion Papers Series from University of Bonn and University of Cologne, Germany Niebuhrstrasse 5, 53113 Bonn, Germany.
Bibliographic data for series maintained by ECONtribute Office ().