Friday, March 27, 2015

Swiss update

It's been two months since Switzerland let their currency appreciate (although it seems to have rebounded from much of its original fall -- but that may just be because markets have the incorrect theory). In most monetary theories of the price level, this would imply that the price level should fall. There is no sign of that yet -- to be sure, it's still to early to tell. I am mostly just setting up my data ingest and graphics output so I can more easily produce updates to the information transfer model prediction that not much will happen.

Here is the graph [1]

The red lines aren't supposed to be exact model predictions -- they're just general trends to be expected based on a generic monetarist-view theory. Looser monetary policy should increase the price level (it actually decreased after the currency depreciation) and tighter policy should decrease the price level.

The dotted green is the data the information transfer model prediction is based on (I used data up through December of 2013). The solid green is data from after Dec 2013. And the black line is the data that has come out both since the model prediction and since the CHF appreciation (15 January 2015).


[1] Here is the zoomed-out version of the whole data set:

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