NGDP betting is abet on the ex post discovery of NGDP vs RGDP, and the number to bet is the BEA release once per quarter. The problem is that this number becomes more accurate as the NGDP release date approaches and the bets will pile up much faster than the NGDP betting machine can organize hem. The betting network becomes jammed and uncomputable in near time.
Hence, the NGFDP betting machne has to raise ledger fees, betting fees, as the release date approaches. We get:
NGDPbet = NGDPmeasured - betting fees
The two terms on the right are random processes, mostly queuing processes. Hence the number on the left will be a random process with variance equal to almost the sum of variances in the two terms on the right. As a result the bet spread will be very broad, Ledger fee, on average, becomes large and flows to he betting machine. The net result is that the central betting machine never is capable of targeting accurately, mostly orbiting in a large region around some poorly estimated fix point.
There are fixes, most of them involve eliminating feedback from the BEA and instead sending feedback back to the BEA, This is something we can get into, and the problem as always are time syncs that are easily hedged.
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