Discussion paper

DP17305 Narratives about the Macroeconomy

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 8,000
US households and 100 academic experts. We document three main findings. First,
compared to experts, households’ narratives are coarser, focus less on the demand side,
and are more likely to 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


Andre, P, I Haaland, C Roth and J Wohlfart (2022), ‘DP17305 Narratives about the Macroeconomy‘, CEPR Discussion Paper No. 17305. CEPR Press, Paris & London. https://cepr.org/publications/dp17305