Home > Aggregate Supply, econometrics, Market Monetarism > If only we had a good estimate of market expectations…

If only we had a good estimate of market expectations…

13/Dec/2012

One could do all sorts of compelling analyses, if one had a good, high resolution estimate of the market’s underlying NGDP forecast. For example, on the day before GDP for t-1 is released, let’s say you know what market prices imply/implied about  the level of  GDP in t-1. Of if you like better, you were blinded to all things not of the market, at least so far as the economic outlook.  A bad GDP release can move markets, so this would give you a good market breakeven forecasts for NGDP (and thus for many other variables released before NGDP, which isn’t really a huge release).  These could be a cheap forecast for the public to follow, potentially on a daily or even minutely basis.

This is all just speculation though, as no one has a good estimate.

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