This paper presents a review of the existing literature on sustainable growth. The article’s goals are to assess our understanding on issues related to sustainable growth and to identify important open questions and directions for future research.

This paper applies algorithmic analysis to financial market text-based data to assess how narratives and sentiment might drive financial system developments. We find changes in emotional content in narratives are highly correlated across data sources and show the formation (and subsequent collapse) of exuberance prior to the global financial crisis. Our metrics also have predictive power for other commonly used indicators of sentiment and appear to influence economic variables. A novel machine learning application also points towards increasing consensus around the strongly positive narrative prior to the crisis. Together, our metrics might help to warn about impending financial system distress.

How do people form expectations about the future? We use amateur and expert investors' expectations about financial asset prices to study this question. Three experiments contrast the rational expectations assumption from neoclassical economics (investors forecast according to neoclassical financial theory) against two psychological theories of expectation formation—behaviourally informed expectations (investors understand empirical market anomalies and expect these anomalies to occur) and narrative expectations (investors use narrative thinking to predict future prices). There were some mild effects of expertise, but overall the effects of narrative appear to be consistent across all levels of expertise studied, including professional financial analysts. We conclude by discussing the prospects for a narrative theory of choice that provide new micro-foundational insights about economic behaviour.