Jason Smith — Three sigma deviation in the 10-year rate

Summary:
Now you might wonder how raising interest rates to only about 2% could trigger a recession today in the same way raising interest rates to 14% did in the 80s. I admit I don't have a good answer to this except to say increasing labor force participation in the 80s probably provided a sufficient tailwind that Fed had to do do much more.In any case, this makes for an excellent test of the model. Interest rates should come back down in the near term (about 6 months). A possible mechanism to bring them down is recession. The longer they stay at the 99.9% of their range or further, the more likely the model can be rejected. Mirabile dictu! An economic model that is testable.Information Transfer EconomicsThree sigma deviation in the 10-year rateJason Smith

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Mike Norman considers the following as important: economic modeling, information transfer economics

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