  There is growing awareness within the economics profession of the important
role narratives play in the economy. Even though empirical approaches that try
to quantify economic narratives are getting increasingly popular, there is no
theory or even a universally accepted definition of economic narratives
underlying this research. First, we review and categorize the economic
literature concerned with narratives and work out the different paradigms that
are at play. Only a subset of the literature considers narratives to be active
drivers of economic activity. In order to solidify the foundation of narrative
economics, we propose a definition of collective economic narratives, isolating
five important characteristics. We argue that, for a narrative to be
economically relevant, it must be a sense-making story that emerges in a social
context and suggests action to a social group. We also systematize how a
collective economic narrative differs from a topic and from other kinds of
narratives that are likely to have less impact on the economy. With regard to
the popular use of topic modeling as an empirical strategy, we suggest that the
complementary use of other canonical methods from the natural language
processing toolkit and the development of new methods is inevitable to go
beyond identifying topics and be able to move towards true empirical narrative
economics.
