A narrative is a popular story that arises from the public consciousness of market events. The most viral and intense of these may dominate public attention. Narratives are rooted in popular beliefs and are not necessarily from economists’ minds.
Hence, by definition, a multitude of narratives may circulate in social interactions. They may evolve overtime and some of them may be picked up by central banks. Narratives can have different natures. For example, on top of the economic narratives, we introduce also the concept of societal narratives (environmental and social) as well as a geopolitical risk narrative.
While narratives have been around for a long time, even before their economic conceptualisation by Nobel prize winning economist Robert Shiller few years ago, their impact has not been yet fully exploited.