Political relationships hidden in markets.

 2008-03-08 23:44:38 +0000 economics personal

I’m again applying Granger causality to time series data from Intrade. This time, however, I connect box A to box B with a

Shorter arrows suggest stronger relationships (technically, a lower p-value).

Running the algorithm on the market data since January 1, 2008 with a lag of two days produces the following graph:

And so, we see that the market data is encoding some

It’s amazing to me (and hopefully also to you) that the relationships between the prices of these Intrade contracts manages to encode popular sentiments.