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Expectations, Markets, and the “Political” Economy

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When it comes to measuring people’s expectations, economists are often skeptical of the direct approach—asking them. Instead, economists prefer information derived from markets, where people have money on the line and thus have incentives to use information carefully and to reveal their true beliefs.

Suggested citation: "Expectations, Markets, and the 'Political' Economy," Federal Reserve Bank of Cleveland, Economic Trends, no. 00-11, pp. 04-05, 11.01.2000.

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