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Narrative Economics

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  • Robert J. Shiller

Abstract

This address considers the epidemiology of narratives relevant to economic fluctuations. The human brain has always been highly tuned toward narratives, whether factual or not, to justify ongoing actions, even such basic actions as spending and investing. Stories motivate and connect activities to deeply felt values and needs. Narratives "go viral" and spread far, even worldwide, with economic impact. The 1920-1921 Depression, the Great Depression of the 1930s, the so-called Great Recession of 2007-2009, and the contentious political-economic situation of today are considered as the results of the popular narratives of their respective times. Though these narratives are deeply human phenomena that are difficult to study in a scientific manner, quantitative analysis may help us gain a better understanding of these epidemics in the future.

Suggested Citation

  • Robert J. Shiller, 2017. "Narrative Economics," American Economic Review, American Economic Association, vol. 107(4), pages 967-1004, April.
  • Handle: RePEc:aea:aecrev:v:107:y:2017:i:4:p:967-1004
    Note: DOI: 10.1257/aer.107.4.967
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    Cited by:

    1. repec:eee:jeborg:v:148:y:2018:i:c:p:189-198 is not listed on IDEAS
    2. Armenak Antinyan & Luca Corazzini & Elena D'Agostino & Filippo Pavesi, 2017. "Watch your Words: an Experimental Study on Communication and the Opportunity Cost of Delegation," Working Papers 18/2017, University of Verona, Department of Economics.
    3. Luis E. Arango & Javier Pantoja & Carlos Velásquez, 2017. "Effects of the central bank’s communications in Colombia. A content analysis," Borradores de Economia 1024, Banco de la Republica de Colombia.
    4. Florian Brugger & Joern Kleinert, 2017. "The strong increase of Austrian government debt in the Kreisky era: Austro-Keynesianism or just stubborn forecast errors?," Graz Economics Papers 2017-15, University of Graz, Department of Economics.
    5. Gabriel Mathy & Herman O. Stekler, 2017. "Was the Deflation of the Depression Anticipated? An Inference Using Real-time Data," Working Papers 2017-004, The George Washington University, Department of Economics, Research Program on Forecasting.
    6. repec:eee:jeborg:v:150:y:2018:i:c:p:98-113 is not listed on IDEAS

    More about this item

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G01 - Financial Economics - - General - - - Financial Crises
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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