Will I Win My Oil Bet? The Wolfers Factor
By Bryan Caplan
Justin Wolfers says that current price of oil is a better predictor of future oil prices than oil futures markets:
And it turns out that they all do worse than one simple forecast: the current oil price. That’s right: the most accurate forecast of oil prices over the next month, year, or quarter is the current oil price. We call this the no-change forecast.
As long as Wolfers is referring to the nominal price, I’m on track to win my bets with Cowen and Balan. If he’s referring to the real price, I may be in trouble.