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Macro MarketsCreating Institutions for Managing Society's Largest Economic Risks$
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Robert J. Shiller

Print publication date: 1998

Print ISBN-13: 9780198294184

Published to Oxford Scholarship Online: November 2003

DOI: 10.1093/0198294182.001.0001

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Making It Happen

Making It Happen

(p.201) 9 Making It Happen
Macro Markets

Robert J. Shiller (Contributor Webpage)

Oxford University Press

In attempting to carry to its logical conclusion the premise that there should be sharing, through markets, of standard‐of‐living risks, this book has proposed quite a number of new markets, although not all of the details of the methods of establishment of these macro markets have been worked out. In the absence of a complete specification of the characteristics of the markets and associated institutions, some of the proposed markets appear perhaps unrealistic or improbable, and their potential may not be fulfilled, at least for years, or even decades. However, if the development of the new markets proposed does occur, it could plausibly take place in two stages: in the first, the users of the markets would be a relatively small number of sophisticated traders who make limited use of the markets for their special purposes, promote the initial liquidity of the markets, and create a base from which use of the markets might grow; in the second stage, these markets would then be used by the general public to protect their standards of living, but this stage would not come until the associated institutions, retail markets, facilitate the use by the general public of the new markets. While the first‐stage use of some of the markets proposed might not be far off, it is the second stage, when there is broad use of the markets to protect standards of living, that is most important to achieve. To make the full potential for these new markets a reality, doubts would have to be overcome, investments made in public goods, index numbers developed, incentives and information provided, institutions changed, and the public educated about the merits of the new institutions. These matters are discussed in this chapter.

Keywords:   institutional change, institutions, investment in public goods, macro markets, market development, new markets, public education, risk management, standards of living

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