Ex-ante

For the newspaper, seeEx-Ante (online newspaper).

The termex-ante(sometimes writtenex anteorexante) 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-anteis used most commonly in the commercial world, where results of a particular action, or series of actions, are forecast (or intended). The opposite ofex-anteisex-post(actual) (orex post). Buying a lottery ticket loses you money ex ante (inexpectation), but if you win, it was the right decision ex post.

Examples

Finance

• In the financial world, theex-ante returnis the expectedreturn of an investment portfolio.
• In therecruitmentindustry,ex-anteis often used when forecasting resource requirements on large future projects.

Theex-ante(andex-post) reasoning in economic topics was introduced mainly by Swedish economistGunnar Myrdalin his 1927–39 work on monetary theory, who described it in this way:

An important distinction exists between prospective and retrospective methods of calculating economic quantities such as incomes, savings, and investments; and [...] a corresponding distinction of great theoretical importance must be drawn between two alternative methods of defining these quantities. Quantities defined in terms of measurements made at the end of the period in question are referred to asex post;quantities defined in terms of action planned at the beginning of the period in question are referred to asex ante.)

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 antesaving and investment decisions are not at parity in general whileex postsaving and investment are recorded in bookkeeping balance exactly:

There is in fact no contradiction at all between the statement of an exact bookkeeping balanceex postand the obvious inference that in a situation when saving is increasing without a corresponding increase of investment, or perhaps with an adverse movement in investment, there must be a tendencyex anteto a disparity. (Gunnar Myrdal, Monetary Equilibrium, London: W. Hodge 1939: 46)

This analysis has become a standard tool inmacroeconomics.

Prices are quantities that directly refer to a point of time: they are determined at a point of time, after anex anteadjustment 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 thatex antedisparity andex postbalance are made consistent through price changes, which result from the behavior of economic agents, which is based onex anteanticipations:

For these anticipations determine the behaviour of the economic subjects and consequently those changes in the whole price system which during a period actually occur as a result of the actions of individuals. (Gunnar Myrdal,Monetary Equilibrium, London: W. Hodge 1939: 121)

In context ofex-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:

Some of these quantities refer directly to a point of time. That is true of "capital value" as also of such quantities as demand and supply prices. Other terms – as e.g. "income", "revenue", "return", "expenses", "savings", "investments" – imply, however, a time period for which they are reckoned. But in order to be unambiguous they must also refer to a point of time at which they are calculated. (Gunnar Myrdal, Monetary Equilibrium, London: W. Hodge 1939: 46–7)

EconomistG. L. S. Shackleclaimed the importance of Gunnar Myrdal´s analysis by which saving and investment are allowed to adjustex anteto each other. However, the reference toex anteandex postanalysis has become so usual in modern macroeconomics that the position ofJohn Maynard Keynesto not include it in his work was currently considered as an oddity, if not a mistake. As Shackle put it:

Myrdalianex antelanguage would have saved the General Theory from describing the flow of investment and the flow of saving as identically, tautologically equal, and within the same discourse, treating their equality as a condition which may, or not, be fulfilled. (Shackle, G.L.S. (1989) "What did the General Theory do?", in J. Pheby (ed), New Directions in Post-keynesian Economics, Aldershot: Edward Elgar.)

European Union law

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

See also

• A priori
• List of Latin phrases
• Ex post factolaw

External links

• A Methodolocical Issue:Ex AnteandEx PostAnalysis Irrelevant to Keynes's Theory of Employment
• Rules from Myrdal’s Monetary Equilibrium Adrián de León-AriasArchived2014-10-21 at theWayback Machine
• Monetary Equilibrium -Claes Henrik Siver Stockholm UniversityArchived2022-08-13 at theWayback Machine
• Myrdal's Analysis of Monetary Equilibrium G.L.S. Shackle