Two new NGDP prediction markets
Hypermind has two new NGDP prediction markets up and running, one covering 2020:Q4 to 2021:Q4, and one covering 2021:Q4 to 2022:Q4.
It’s early, and I don’t believe there’s been much trading, but so far the predicted growth rates are rather low (below 4%.)
I hope to get the new markets embedded here soon, but feel free to start picking up some of the $100 bills on the sidewalk (actually Amazon coupons.)
And once again, people with more money and power than me should be working hard on getting a highly liquid NGDP prediction market up and running. A high quality NGDP prediction market is like a billion dollar bill that’s lying on the sidewalk. So why has the federal government been too lazy to pick it up?
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27. October 2020 at 04:31
Why is the projected growth rate so volatile? And over short time periods (one day even). I assume it’s because so few are participating. I’m not sure if the volatility will encourage more participants or discourage more participants. For now, there’s both risk and reward.
27. October 2020 at 07:14
I realize you are speaking of NGDP markets—–implicitly “betting” markets (by analogy if nothing else). For an EMH guy you sure sound confident on those $100 bills—actually—what does EMH say about less liquid markets? Nothing—but if they did I am guessing its still “50/50” on outperformance
Re: analytic “markets”—I just noticed a very odd thing on Nate’s 538 site. His model gives Trump a 70% chance of winning if he wins PA—meaning hold all else equal but win PA. Add Florida, and it is 87%. This is from his own site using his calculator
His model as is gives Trump a 10% chance. He has all sorts of conditional mini correlations built into his model—hence it is likely more complex underneath the weeds.
Still—-I think a model which has such high leverage on small number of events is likely flawed.
27. October 2020 at 07:19
I am giving Nate the benefit of the doubt. He is the one saying his model would give those outputs—I am astounded. Suddenly, Rasmussen and Trafalgar don’t look crazy. I know you think Trump will win—not sure of your subjective confidence level–although my sense is it is high.
27. October 2020 at 07:43
SS: “And once again, people with more money and power than me…” – says the economist who has the ear of the Federal Reserve and who’s probable net worth of several million puts them in the top 5% of the world’s population.
Whatever happened to Mr. Duda? Wasn’t he sponsoring some sort of prediction market for Sumner? Or did his software firm go bust?
27. October 2020 at 08:18
Off topic, but speaking of prediction markets….
https://www.msn.com/en-us/news/politics/gamblers-say-trump-is-almost-tied-with-biden-don-t-bet-on-it/ar-BB1akIMx
27. October 2020 at 10:14
Rayward, It’s a brand new market, not much trading yet.
27. October 2020 at 11:31
The increasing popularity of the NY FED’s Nowcast
https://www.newyorkfed.org/research/policy/nowcast
and the Atlanta FED’s GDPNow
https://www.frbatlanta.org/cqer/research/gdpnow
should lend support to speculating.
27. October 2020 at 12:51
John C. Williams speech – re: “In particular, “following periods when inflation has been running persistently below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.”
Just where is the evidence. Sounds a lot like Trump.
28. October 2020 at 07:03
“Is the Phillips Curve Dead?” asked Princeton economist Alan Blinder in a May 3 2018 Wall Street Journal article. The former Vice-Chairman of the Fed noted that “the correlation between unemployment and changes in inflation is nearly zero… Inflation has barely moved as unemployment rose and fell.”
28. October 2020 at 08:11
The FED’s new regime, average inflation targeting, “will allow inflation to run above 2% for a period of time to account for the current period — the last eight years, in fact — where it has missed that target.”
But: “Home prices are rising at twice the rate of wage growth.”
QE, interest rate targeting, artificially inflates asset prices. How does that drive personal income growth?
28. October 2020 at 12:43
Short-term money flows, proxy for real output, have peaked?
02/1/2020 ,,,,, 0.04
03/1/2020 ,,,,, 0.05
04/1/2020 ,,,,, 0.07
05/1/2020 ,,,,, 0.09
06/1/2020 ,,,,, 0.10
07/1/2020 ,,,,, 0.11
08/1/2020 ,,,,, 0.12
09/1/2020 ,,,,, 0.13
10/1/2020 ,,,,, 0.13 peaked?
11/1/2020 ,,,,, 0.12
12/1/2020 ,,,,, 0.10
01/1/2021 ,,,,, 0.08
02/1/2021 ,,,,, 0.06
03/1/2021 ,,,,, 0.04
04/1/2021 ,,,,, 0.02
05/1/2021 ,,,,, 0.01
The need for new stimulus is right in front of us.
Alan Greenspan’s “irrational exuberance” speech:
http://www.federalreserve.gov/boarddocs/speeches/1996/19961205.htm
“Because monetary policy works with a lag, we need to be forward looking, taking actions to forestall imbalances that may not be visible for many months. There is no alternative to basing actions on forecasts, at least implicitly. It means that often we need to TIGHTEN or EASE before the need for action is evident to the public at large, and that policy may have to reverse course from time to time as the underlying forces acting on the economy shift. This process is not easy to get right at all times, and it is often difficult to convey to the American people, whose support is essential to our mission.”