Yale University economist Robert Shiller has a message for German Chancellor Angela Merkel: You are telling the wrong story. To Mr. Shiller, whose influential book "Animal Spirits" explored the "stories" that individual investors tell themselves, says Ms. Merkel's constant refrain on the need for austerity to resolve the euro-zone debt crisis, a position she reiterated Wednesday in a speech to the World Economic Forum here, will kill investors' willingness to take on risk. "Our confidence, our willingness to be entrepreneurial, to spend, depends on the kinds of stories that we are telling. And right now the stories are not so inspirational," Mr. Shiller said in an interview. "We are talking about a possible breakup of the euro, [a currency project] which has been held up as a great inspiration for the future. And the story of a government bailout is also really a story of failure. So I think of these things as weighing on us for years to come, these stories." By this logic, the challenge for policy makers is to change the story.
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