Ex Ante

The term (sometimes written or ) is a New Latin phrase meaning "before the event".

In economics, ''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

Finance

* 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 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.

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 to not include it in his work was
currently considered as an oddity, if not a mistake. As Shackle put it:

European Union law

In European Union law, ''ex ante'' regulation is a type of regulation that is designed to prevent companies engaging in harmful conduct. It is usually used in sectors where there is anti-competitive behavior. For example, such regulations are used in the telecommunications sector as well as in relation to data protection (the General Data Protection Regulation is an ex-ante regulation)

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