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Narrative Fragmentation and the Business Cycle

Christoph Bertsch, Isaiah Hull and Xin Zhang
Additional contact information
Xin Zhang: Research Department, Central Bank of Sweden, Postal: Sveriges Riksbank, SE-103 37 Stockholm, Sweden

No 401, Working Paper Series from Sveriges Riksbank (Central Bank of Sweden)

Abstract: According to Shiller (2017), economic and financial narratives often emerge as a con sequence of their virality, rather than their veracity, and constitute an important, but understudied driver of aggregate fluctuations. Using a unique dataset of newspaper articles over the 1950-2019 period and state-of-the-art methods from natural language processing, we characterize the properties of business cycle narratives. Our main finding is that narratives tend to consolidate around a dominant explanation during expansions and fragment into competing explanations during contractions. We also show that the existence of past reference events is strongly associated with increased narrative consolidation.

Keywords: Natural Language Processing; Machine Learning; Narrative Economics (search for similar items in EconPapers)
JEL-codes: C63 D84 E32 E70 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2021-01-01
New Economics Papers: this item is included in nep-big, nep-his and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Journal Article: Narrative fragmentation and the business cycle (2021) Downloads
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