Narratives about the Macroeconomy

Peter Andre, Ingar Haaland, Christopher Roth and Johannes Wohlfart
Additional contact information
Johannes Wohlfart: Department of Economics and CEBI, University of Copenhagen

No 21-18, CEBI working paper series from University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI)

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)
JEL-codes: D83 D84 E31 E52 E71 (search for similar items in EconPapers)
Pages: 104
Date: 2021-11-25
New Economics Papers: this item is included in nep-ban, nep-cba, nep-cwa, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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https://www.econ.ku.dk/cebi/publikationer/working-papers/CEBI_WP_18-21.Rev2.pdf (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)
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Persistent link: https://EconPapers.repec.org/RePEc:kud:kucebi:2118

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