The Macroeconomic Narrative Index (MNI): Conceptual Foundations and Empirical Framework

Abstract

This paper introduces the Macroeconomic Narrative Index (MNI), a normalized measure to quantify the reach and strength of economic narratives. Unlike common macroeconomic indicators such as inflation or unemployment, narratives lack widely accepted measures, which hinders cross-country comparison and historical analysis. The MNI bridges this gap by combining two dimensions: narrative reach (encompassing geographic diffusion, platform diversity, and temporal persistence) and narrative strength (comprising sentiment polarity, emotional intensity, and rhetorical authority). Composed of media, policy, and social media documents by natural language processing, sentiment analysis, and diffusion measures, the MNI has empirical uses for the Global Financial Crisis of 2008–2009 and the COVID-19 pandemic of 2020–2022 and confirms its performance: the MNI accurately forecasts consumer confidence, industrial production, inflation expectations, and policy uncertainty, and tends to peak ahead of conventional indicators. The findings recommend the MNI as an early warning tool, a measure of policy communication quality, and a takeoff point for cross-country and long-term research in narrative economics.