Federal Reserve Research: Kalshi Could Be a Superior Macroeconomic Expectations Measurement Tool

BlockBeats News, February 19th: Three Federal Reserve researchers believe that the prediction market Kalshi outperforms existing tools in real-time measurement of macroeconomic expectations and should therefore be incorporated into the Fed's decision-making process.

The research paper titled "Kalshi and the Rise of Macro Markets" was released on February 12th, authored by Federal Reserve Board Chief Economist Anthony Diercks, Federal Reserve Research Assistant Jared Dean Katz, and Johns Hopkins University Research Assistant Jonathan Wright.

The study compared Kalshi's data with traditional surveys and market-implied forecasts to examine how market expectations of future economic outcomes evolve based on macroeconomic news and policymakers' statements.

"Managing expectations is at the core of modern macroeconomic policy. However, the tools we typically rely on—surveys and financial derivatives—have many shortcomings," the researchers said, adding that Kalshi can capture the market's "beliefs" in a "direct and real-time" manner. "The Kalshi market provides a high-frequency, continuously updating, information-rich benchmark, which is valuable to researchers and policymakers alike."