MEF-Seminar Summersemester 2022

Chris Roth, University of Cologne, 13.04.2022

We provide evidence on narratives about the macroeconomy—stories individuals tell to make sense of economic phenomena—in the context of a historically notable rise in inflation. In surveys with experts and US households, we measure narratives in open-ended text responses and quantitatively represent them as Directed Acyclical Graphs (DAGs). We document three main findings. First, narratives about the drivers of higher inflation rates are heterogeneous and differ fundamentally between experts and households. Compared to experts’ narratives, households’ narratives are more fragmented, focus less on the demand side, and are more likely to feature ideologically loaded explanations, such as government mismanagement or price gouging. Second, households’ narratives are predictive of their inflation expectations, and an additional experiment reveals that drawing households’ attention to government spending causally affects their narratives and inflation expectations.
Wednesday, 13.04.2022 12:15 - 13:30
"Narratives about the Macroeconomy"
Juridicum, Adenauerallee 24-42
Faculty Room
Institute for Macroeconomics and Econometrics
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