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Macro markets and financial security

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Author Info

  • Stefano Athanasoulis
  • Robert Shiller
  • Eric van Wincoop

Abstract

Uncertainty about national income growth poses significant macroeconomic risk to households all over the world. To help reduce investors' exposure, researchers have proposed a controversial new set of security markets called macro markets. These international markets would trade long-term claims on the income of an entire country or region. For example, in a macro market for the United States, an investor could buy a claim on the U.S. national income and then receive dividends equal to a fraction of national income for as long as the claim is held. Although many barriers stand in the way of the markets' development - including investors' focus on short-term portfolio performance, sizable startup costs, and contract enforcement difficulties - the potential benefits of these markets are great.

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Bibliographic Info

Article provided by Federal Reserve Bank of New York in its journal Economic Policy Review.

Volume (Year): (1999)
Issue (Month): Apr ()
Pages: 21-39

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Handle: RePEc:fip:fednep:y:1999:i:apr:p:21-39:n:v.5no.1

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Related research

Keywords: Income ; Securities ; Investments;

References

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  1. Simon Kuznets, 1937. "National Income and Capital Formation, 1919-1935," NBER Books, National Bureau of Economic Research, Inc, number kuzn37-1, octubre-d.
  2. Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1, octubre-d.
    • Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1, octubre-d.
  3. Athanasoulis, S. & Shiller, R.J., 1995. "World Income Components: Measuring and Exploting International Risk Sharing Opportunities," Papers 725, Yale - Economic Growth Center.
  4. van Wincoop, Eric, 1996. " A Multi-country Real Business Cycle Model with Heterogeneous Agents," Scandinavian Journal of Economics, Wiley Blackwell, vol. 98(2), pages 233-51, June.
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Citations

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Cited by:
  1. Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 107-126, Spring.
  2. Robert J. Shiller, 1998. "Social Security and Institutions for Intergenerational, Intragenerational, and International Risk Sharing," JCPR Working Papers 43, Northwestern University/University of Chicago Joint Center for Poverty Research.
  3. Stafano Athanasoulis & Eric van Wincoop, 1998. "Risksharing within the United States: what have financial markets and fiscal federalism accomplished?," Research Paper 9808, Federal Reserve Bank of New York.
  4. Hahn, Robert W. & Tetlock, Paul C., 2004. "A New Approach for Regulating Information Markets," Working paper 162, Regulation2point0.
  5. Nick Davis, 2001. "Does Crown Financial Portfolio Composition Matter?," Treasury Working Paper Series 01/34, New Zealand Treasury.
  6. Abraham Lioui & Patrice Poncet, 2001. "Dynamic Asset Pricing With Non-Redundant Forwards," Working Papers 2001-10, Department of Economics, Bar-Ilan University.
  7. Barry Eichengreen, 2007. "Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America?," Open Economies Review, Springer, vol. 18(1), pages 27-52, February.
  8. Chamon, Marcos & Mauro, Paolo, 2006. "Pricing growth-indexed bonds," Journal of Banking & Finance, Elsevier, vol. 30(12), pages 3349-3366, December.
  9. Wagner, W.B., 2000. "Decentralized International Risk Sharing and Governmental Moral Hazard," Discussion Paper 2000-92, Tilburg University, Center for Economic Research.
  10. Majumder, Neeta & Majumder, Debasish, 2002. "Measuring income risk to promote macro markets," Journal of Policy Modeling, Elsevier, vol. 24(6), pages 607-619, October.

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