Working Paper

On the use of market-based probabilities for policy decisions


Abstract: This paper seeks to delimit conditions so that market-based probabilities provide all the information the policymaker needs to arrive at the best possible decision. Although there are practical considerations regarding how to derive market-based probabilities from financial prices, the author confines the discussion to a theoretical analysis that assumes no impediment to obtaining the market-based probabilities.

Keywords: Policy; Market-based probabilities; Policymaker; ;

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Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2015-12-14

Number: 15-44

Pages: 11 pages