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The term ''ex-ante'' (sometimes written ''ex ante'' or ''exante'') is a phrase meaning "before the event". Ex-ante or notional demand refers to the desire for goods and services that is not backed by the ability to pay for those goods and services. This is also termed as 'wants of people'. ''Ex-ante'' is used most commonly in the commercial world, where results of a particular action, or series of actions, are forecast (or intended). The opposite of ''ex-ante'' is '' ex-post'' (actual) (or ''ex post''). Buying a lottery ticket loses you money ex ante (in expectation), but if you win, it was the right decision ex post. Examples: * In the financial world, the ''ex-ante return'' is the expected return of an investment portfolio. * In the recruitment industry, ''ex-ante'' is often used when forecasting resource requirements on large future projects. The ''ex-ante'' (and ''ex-post'') reasoning in economic topics was introduced mainly by Swedish economist
Gunnar Myrdal Karl Gunnar Myrdal ( ; ; 6 December 1898 – 17 May 1987) was a Swedish economist and sociologist. In 1974, he received the Nobel Memorial Prize in Economic Sciences along with Friedrich Hayek for "their pioneering work in the theory of money a ...
in his 1927–39 work on monetary theory, who described it in this way: Focusing attention on the relation between saving and investment, Myrdal argued that one may without any contradiction consider that, as they are made by separate agents, ''ex ante'' saving and investment decisions are not at parity in general while ''ex post'' saving and investment are recorded in bookkeeping balance exactly: This analysis has become a standard tool in
macroeconomics Macroeconomics (from the Greek prefix ''makro-'' meaning "large" + ''economics'') is a branch of economics dealing with performance, structure, behavior, and decision-making of an economy as a whole. For example, using interest rates, taxes, and ...
. Prices are quantities that directly refer to a point of time: they are determined at a point of time, after an ''ex ante'' adjustment process has taken place. As for the macroeconomic quantities, Myrdal proposed to refer to the point of time at which they are calculated. Gunnar Myrdal further explained that ''ex ante'' disparity and ''ex post'' balance are made consistent through price changes, which result from the behavior of economic agents, which is based on ''ex ante'' anticipations: In context of ''ex-ante'', the Swedish economist Myrdal also dealt with the question of the unit of time, which he proposed to solve by reducing the actual time-dimension of macroeconomic variables such as income, saving and investment to a point of time: Economist G. L. S. Shackle claimed the importance of Gunnar Myrdal´s analysis by which saving and investment are allowed to adjust ''ex ante'' to each other. However, the reference to ''ex ante'' and ''ex post'' analysis has become so usual in modern macroeconomics that the position of
John Maynard Keynes John Maynard Keynes, 1st Baron Keynes, ( ; 5 June 1883 – 21 April 1946), was an English economist whose ideas fundamentally changed the theory and practice of macroeconomics and the economic policies of governments. Originally trained in ...
to not include it in his work was currently considered as an oddity, if not a mistake. As Shackle put it:


See also

* '' A priori'' * List of Latin phrases * ''Ex post facto'' law


References


External links


A Methodolocical Issue: ''Ex Ante'' and ''Ex Post'' Analysis Irrelevant to Keynes's Theory of Employment

Rules from Myrdal’s Monetary Equilibrium Adrián de León-Arias

Monetary Equilibrium -Claes Henrik Siver Stockholm University

Myrdal's Analysis of Monetary Equilibrium G.L.S. Shackle
{{DEFAULTSORT:Ex-Ante Latin words and phrases Macroeconomics Investment