Construct to Commitment: The Effect of Narratives on Economic Growth

Abstract: We study how government-led narratives through mass media evolve from construct, a mechanism for framing expectations, into commitment, a sustainable pillar for growth. We propose the ``Narratives-Construct-Commitment (NCC)" framework outlining the mechanism and institutionalization of narratives, and formalize it as a dynamic Bayesian game. Using the Innovation-Driven Development Strategy (2016) as a case study, we identify the narrative shock from high-frequency financial data and trace its impact using local projection method. By shaping expectations, credible narratives institutionalize investment incentives, channel resources into R&D, and facilitate sustained improvements in total factor productivity (TFP). Our findings strive to provide insights into the New Quality Productive Forces initiative, highlighting the role of narratives in transforming vision into tangible economic growth.