Beyond the Numbers: Professional Forecasters’ Narratives About Inflation and Stock Market Performance

Christian Conrad, Julius Schoelkopf, Michael Weber and Frank Brueckbauer

No 13076, CESifo Working Paper Series from CESifo

Abstract: Professional forecasters' heterogeneous narratives about how inflation affects stock markets in 2023 rationalize their high disagreement regarding quantitative expectations for 12-month-ahead inflation and stock returns in December 2022. Professional forecasters causally update their return expectations in heterogeneous directions in response to information about the inflation outlook, depending on the narrative they entertain. Moreover, the narratives also affect their asset allocation in a hypothetical portfolio-choice experiment. Providing common signals does not necessarily lead to convergence of beliefs if agents subscribe to different narratives.

Keywords: narratives; expectation formation; inflation; beliefs; monetary policy; subjective models; RCT; inflation expectations; return expectations (search for similar items in EconPapers)
JEL-codes: D83 D84 E31 E44 E52 E71 G11 G12 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-mon
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