Kalshi Goes Macro | a16z
Link to the paper : Kalshi and the Rise of Macro Markets
"Fed researchers think prediction markets are pretty neat.
By one measure, at least, Kalshi is doing a better job of forecasting the Fed Funds Rate than professional forecasters:
For the federal funds rate forecasts 150 days (3 FOMC meetings) ahead, Kalshi’s mean absolute error is very similar to that of professional forecasters. But unlike the survey—which provides a snapshot every six weeks of a modal path—Kalshi offers a continuously updating full distribution
. . . We find the Kalshi median and mode have a perfect forecast record on the day before the FOMC meeting, which represents a statistically significant improvement over the fed funds futures forecast.
In other words, while all the forecasters start out about the same, Kalshi’s “continuously updating” forecasts get better and better over time, culminating in a “perfect forecast record” on the day before rates are officially declared. Plus, Kalshi did better than the futures forecast.
References
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