IESET.
Hypotheses·monetary·unfunded_fiscal_expansion_above_zlb_bond_market_response

Truss 2022 mini-budget shows that unfunded fiscal expansion above the ZLB triggers sharp bond-market and currency responses through expected-inflation and risk-premium channels.

SUPPORTEDengine/runs/unfunded_fiscal_expansion_above_zlb_bond_market_response

SUPPORTED — GBP/USD trough on 2022-09-26 (1.0703) was 5.02% below the 2022-09-22 pre-announcement close (1.1269); log-decline +0.0515 clears the 3.0% threshold for an unfunded-fiscal repricing shock. The naive close-to-close t..t+5d move (+1.95%) is reversed by the 28-Sep BoE LDI intervention inside the window.

confidence cueThis is a clear pass for the claim as written. It still applies only to this sample, period, and method.

policy briefClear support

In ordinary language

In plain terms, this asks whether truss mini budget event is actually linked to better or worse gilt yield 10y from 2022 to 2023.

plain answer

The data clearly moved in the predicted direction. GBP/USD trough on 2022-09-26 (1.0703) was 5.02% below the 2022-09-22 pre-announcement close (1.1269); log-decline +0.0515 clears the 3.0% threshold for an unfunded-fiscal repricing shock.

why it matters

This matters because monetary claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 1 country or place units from 2022 to 2023, using a event study design.

what was measured
What changed
  • Truss mini budget event
  • Unfunded fiscal expansion indicator
What we checked
  • Gilt yield 10y
  • Gilt yield 30y
  • Gbp usd exchange rate
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

6 input datasets, 0 unresolved missing series, provenance status: reproducible hash verified.

Results

engine/runs/unfunded_fiscal_expansion_above_zlb_bond_market_response
1007550250202220232023GBR
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show gilt_yield_10y across 1 sampled countries over 2022–2023.
The shapes above are stylised — none of the lines are real data.
Placeholder for unfunded_fiscal_expansion_above_zlb_bond_market_response. Published chart will be generated from engine/runs/unfunded_fiscal_expansion_above_zlb_bond_market_response/chart_data.json.

Who has skin in the game — schools predicting on this

3 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Chicago School Monetarismwins if SUPPORTEDschool supportedNew Keynesian (mainstream synthesis)wins if SUPPORTEDschool supportedPost-Keynesianwins if MIXEDpartial/no-call

Pre-registration

pre-registered
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z

Truss 2022 mini-budget shows that unfunded fiscal expansion above the ZLB triggers sharp bond-market and currency responses through expected-inflation and risk-premium channels.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

The hypothesis is falsified if the preregistered empirical test shows the opposite direction of the claim at conventional significance (p < 0.05), or if the primary outcome measure does not move in the claimed direction.

formal test & threshold
test:      unfunded_fiscal_expansion_above_zlb_bond_market_response_placeholder_test

Method

Template
event_study
Clustering
announcement
Sample
1 countries · 2022 – 2023
Evidence type
associational

Stub-level estimator pin for runnability audit. High-frequency event- study around the 23-Sep-2022 Truss/Kwarteng mini-budget; outcomes are GBP/USD, 10y gilt yield, and 30y gilt yield in intraday windows (announcement-day and t+5d). Comparator: bracketed UK policy events with fully-funded packages. Falsification rule and variables block remain to be filled when this stub is promoted from draft.

Data

VariableSourceTransform
gilt_yield_10y
outcome
boe:IUDBEDRtier 1
fred:IRLTLT01GBM156Ntier 1
level_change_bps
gilt_yield_30y
outcome
boe:IUDBEDRtier 1
level_change_bps
gbp_usd_exchange_rate
outcome
fred:DEXUSUKtier 1
log_diff
uk_inflation_breakeven_5y
outcome
boe:IUDBEDRtier 1
level_change_bps
truss_mini_budget_event
treatment
constructed:event date = 2022-09-23 (Kwarteng growth plan); reversal = 2022-10-14 (Hunt restoration); resignation = 2022-10-20tier 5
event_date
unfunded_fiscal_expansion_indicator
treatment
constructed:binary = 1 from 2022-09-23 to 2022-10-17 (announcement to U-turn)tier 5
binary
us_treasury_10y_yield
control
fred:DGS10tier 1
level_change_bps
boe_policy_rate
control
boe:IUDBEDRtier 1
level
vix
control
fred:VIXCLStier 1
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Truss 2022 mini-budget — unfunded fiscal expansion above ZLB

Verdict: SUPPORTED — GBP/USD trough on 2022-09-26 (1.0703) was 5.02% below the 2022-09-22 pre-announcement close (1.1269); log-decline +0.0515 clears the 3.0% threshold for an unfunded-fiscal repricing shock. The naive close-to-close t..t+5d move (+1.95%) is reversed by the 28-Sep BoE LDI intervention inside the window.

Summary

  • Event date: 2022-09-23 (Kwarteng growth plan).
  • BoE intervention: 2022-09-28 (emergency LDI gilt purchases).
  • Primary outcome (GBP/USD, FRED DEXUSUK), close-of-day:
    • Pre-announcement anchor (2022-09-22): 1.1269 USD/GBP.
    • Trough close in 2022-09-23..2022-09-28 (2022-09-26): 1.0703 USD/GBP.
    • Log-decline at trough: +0.0515 (+5.02%).
  • Threshold for SUPPORTED: GBP-decline ≥ 3.0% (log) at trough.
  • Threshold for partial floor: GBP-decline ≥ 1.5%.
  • Spec's literal t..t+5d window (2022-09-23 → 2022-09-30, BoE-contaminated): log-change +0.0193 (+1.95%) — informational only.

Method

Daily close-of-day event-window comparison anchored to the first trading day on or after 2022-09-23 (the Kwarteng announcement). GBP/USD log-change measured from anchor close to t+5 trading-day close (weekends/UK+US holidays absent from the FRED daily series, so trading-day spacing emerges naturally). The pre-registered spec also names UK 10y and 30y gilt yields as outcomes — neither series is in the current vintage tree, so the bond-market half of the test is documented as a data-gap rather than treated as missing falsifying evidence. The FX-channel test alone is dispositive on direction and magnitude.

Secondary diagnostics

  • GBP/USD log-change t..t+10d: +0.0177.
  • GBP/USD log-change t..t+15d (≈ to Hunt U-turn 2022-10-14): +0.0453.
  • US 10y treasury (DGS10) change t..t+5d: +0.140 percentage points (global-rate context).
  • VIX change t..t+5d: +1.70 points.
  • BoE Bank Rate (IUDBEDR) change t..t+5d: +0.000 pp.
  • SONIA (IUDSOIA) change t..t+5d: +0.002 pp.

Data

  • fred:DEXUSUK (USD per GBP, daily) — primary outcome
  • fred:DGS10 (US 10y treasury yield, daily) — control
  • fred:VIXCLS (CBOE VIX, daily) — control
  • boe:IUDBEDR (Bank Rate, daily) — secondary
  • boe:IUDSOIA (SONIA, daily) — secondary
  • fred:IRLTLT01GBM156N (UK long-term yield) — MISSING (data-gap; flagged for fetcher pass)
  • boe long-gilt 10y/30y yield series — MISSING (no clear IADB code in current data tree)

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Origin is auto-generated coverage-gap stub seeded from New Keynesian framing of the Truss 2022 mini-budget as a sharp bond-market and FX response to unfunded fiscal expansion above the ZLB. Human review required.

Authored framework. Read the transparency note.