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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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Keywords: Income ; Securities ; Investments;

References

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  1. Robert Shiller, 2004. "World Income Components: Measuring And Exploiting International Risk Sharing Opportunities," Yale School of Management Working Papers ysm151, Yale School of Management.
  2. Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1.
    • Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1.
  3. Simon Kuznets, 1937. "National Income and Capital Formation, 1919-1935," NBER Books, National Bureau of Economic Research, Inc, number kuzn37-1.
  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. Wagner, W.B., 2000. "Decentralized International Risk Sharing and Governmental Moral Hazard," Discussion Paper 2000-92, Tilburg University, Center for Economic Research.
  2. Barry Eichengreen, 2006. "Insurance Underwriter or Financial Development Fund: What Role for Reserve Pooling in Latin America?," NBER Working Papers 12451, National Bureau of Economic Research, Inc.
  3. Robert J. Shiller, 1998. "Social Security and Institutions for Intergenerational, Intragenerational and International Risk Sharing," Cowles Foundation Discussion Papers 1185, Cowles Foundation for Research in Economics, Yale University.
  4. Justin Wolfers & Eric Zitzewitz, 2004. "Prediction Markets," NBER Working Papers 10504, National Bureau of Economic Research, Inc.
  5. Abraham Lioui & Patrice Poncet, 2001. "Dynamic Asset Pricing With Non-Redundant Forwards," Working Papers 2001-10, Bar-Ilan University, Department of Economics.
  6. Nick Davis, 2001. "Does Crown Financial Portfolio Composition Matter?," Treasury Working Paper Series 01/34, New Zealand Treasury.
  7. Paolo Mauro & Marcos Chamon, 2005. "Pricing Growth-Indexed Bonds," IMF Working Papers 05/216, International Monetary Fund.
  8. Robert Hahn & Paul Tetlock, 2006. "A New Approach for Regulating Information Markets," Journal of Regulatory Economics, Springer, vol. 29(3), pages 265-281, 05.
  9. Majumder, Neeta & Majumder, Debasish, 2002. "Measuring income risk to promote macro markets," Journal of Policy Modeling, Elsevier, vol. 24(6), pages 607-619, October.
  10. 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.

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