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Talking our way into recession? I don’t think so – MarketWatch

May 05
15:13 2016

It’s not every day that I read something by a Nobel laureate in economics in a general-interest publication, not in an academic journal, and find myself wondering, what on earth he was thinking? But that was my reaction to Robert Shiller’s “Economic View” column in the New York Times on Sunday.

In his column, “Listen Carefully for Hints of the Next Global Recession,” Shiller argues that “beliefs and stories passed on by thousands of individuals are important factors, maybe even the main ones, in determining big shifts in the economy.”

He claims that global recessions, of which there have been four since World War II, according to the International Monetary Fund, are a result of “contagious stories” and “newly popular narratives” that reduce individuals’ motivation to spend.

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