I find the literature studying the economic effects of narratives so fascinating.
This new working paper shows that narratives explained 1/5 of the output variance during the Great Recession!
www.nber.org/papers/w32602#EconSky#MonitoringEconomics
oh thats fascinating!
In general explaining 20% of variance to a single variable seems quite high tho, which would imply that it is one of the most impactful variables?
It’s indeed a majorly impactful variable! In many instances, a proper macroeconomic management of narratives could make the difference between the economy growing and being in a recession.
