How Novelty and Narratives Drive the Stock Market: Black Swans, Animal Spirits and Scapegoats (Studies in New Economic Thinking)
Cambridge University Press, 10/14/2021
EAN 9781108838450, ISBN10: 1108838456
Hardcover, 300 pages, 23.5 x 15.9 x 3.2 cm
Language: English
Originally published in English
'Animal spirits' is a term that describes the instincts and emotions driving human behaviour in economic settings. In recent years, this concept has been discussed in relation to the emerging field of narrative economics. When unscheduled events hit the stock market, from corporate scandals and technological breakthroughs to recessions and pandemics, relationships driving returns change in unforeseeable ways. To deal with uncertainty, investors engage in narratives which simplify the complexity of real-time, non-routine change. This book assesses the novelty-narrative hypothesis for the U.S. stock market by conducting a comprehensive investigation of unscheduled events using big data textual analysis of financial news. This important contribution to the field of narrative economics finds that major macro events and associated narratives spill over into the churning stream of corporate novelty and sub-narratives, spawning different forms of unforeseeable stock market instability.
Part I. Novelty, Narratives and Instability
1. Narrative finance and stock market novelty
2. Unpredictably unstable
Part II. News Analytics as a Window into Stock Market Instability
3. Narratology and other disciplines
4. News anaytics
novelty, narratives and non-routine change
5. The corporate Knightian uncertainty index
6. KU Sentiment, novelty and relevance
7. Diversity of corporate uncertainty events
8. Macro versus micro novelty
Part III. Empirical Evidence for the Novelty-Narrative Hypothesis
9. Corporate novelty and stock market outcomes
10. Narrative intensity and stock market instability
11. A manual novelty-narrative scapegoat analysis
12. Applying novelty and narratives to other research
13. The future of novelty, narratives and uncertainty in finance
14. Concluding thoughts and future research
Appendices
Bibliography
Index.