On the Use of Market-Based Probabilities for Policy Decisions

11 Pages Posted: 15 Dec 2015

See all articles by Roc Armenter

Roc Armenter

Federal Reserve Banks - Federal Reserve Bank of Philadelphia

Date Written: 2015-12-14

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

Suggested Citation

Armenter, Roc, On the Use of Market-Based Probabilities for Policy Decisions (2015-12-14). FRB of Philadelphia Working Paper No. 15-44. Available at SSRN: https://ssrn.com/abstract=2703735

Roc Armenter (Contact Author)

Federal Reserve Banks - Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

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