Economists as Storytellers: Scenario Drafting at the International Monetary Fund

Abstract

Abstract This article explores the history of scenario drafting at the International Monetary Fund (IMF) in the 1970s and 1980s. Introduced in the late 1970s, scenarios were used to compare, assess, and illustrate the assumed effects of different policy actions or inactions. They provided alternative versions of a hypothetical future, derived from the research staff's narrative reasoning by which the IMF researchers stitched together qualitative and quantitative assessments, macroeconomic theories, and policy preferences, and presented an instrument to guide policymaking in member countries. The article points to four different functions of narrative in economic reasoning: as a sense-making technology, as a tool of persuasion, to fill in gaps and correct quantitative reasoning, and to link alternative policy measures to changes in parameters and variable inputs in complex econometric models. And yet, by focusing on the often-futile consultations with the United States, the article also highlights the limits of narrative. The article challenges Robert Shiller's description of the spread of an economic narrative as a “random event,” pointing instead to economists' role as storytellers.