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La Economía de la Narrativa: Impacto en los Ciclos Macroeconómicos y su Incorporación en Modelos IS-LM y DSGE
[The Economy of Narrative: Impact on Macroeconomic Cycles and Its Incorporation into IS-LM and DSGE Models]

Author

Listed:
  • Uquillas, Carlos Alfredo

Abstract

This article examines how economic narratives, such as those emerging from business communication, the media, and economic authorities, affect economic behavior and agents' decisions. Based on Keynes' theory of "animal spirits" and Robert Shiller's work on the influence of narratives, a model is proposed in which narratives can directly influence macroeconomic variables such as consumption, investment, and income. Through an applied approach, it suggests how to integrate narrative variables into IS-LM and DSGE models to better understand their effects on the economic cycle. The article also discusses how "confidence" and other narrative expectations affect economic activity and how authorities could incorporate this concept into their analysis and policy formulation.

Suggested Citation

  • Uquillas, Carlos Alfredo, 2025. "La Economía de la Narrativa: Impacto en los Ciclos Macroeconómicos y su Incorporación en Modelos IS-LM y DSGE [The Economy of Narrative: Impact on Macroeconomic Cycles and Its Incorporation into IS," MPRA Paper 124040, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124040
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    File URL: https://mpra.ub.uni-muenchen.de/124040/1/MPRA_paper_124040.pdf
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    More about this item

    Keywords

    Narrative Economics; Economic Confidence; Economic Cycle; IS-LM Model; DSGE Model; Expectations; Narrative Contagion; Animal Spirits; Narrative Hysteresis; Rational Expectations.;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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