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Financial InnovationToo Much or Too Little?$
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Michael Haliassos

Print publication date: 2013

Print ISBN-13: 9780262018296

Published to MIT Press Scholarship Online: January 2015

DOI: 10.7551/mitpress/9780262018296.001.0001

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MacroMarkets and the Practice of Financial Innovation

MacroMarkets and the Practice of Financial Innovation

Chapter:
(p.149) 6 MacroMarkets and the Practice of Financial Innovation
Source:
Financial Innovation
Author(s):

Michael Haliassos

Publisher:
The MIT Press
DOI:10.7551/mitpress/9780262018296.003.0006

This chapter explores the history of MacroMarkets LLC, founded in 2001 by Yale University economist and 2013 Nobel Prize in Economics Robert J. Shiller and Samuel Masucci III. MacroMarkets' main innovation is the "MacroShare," which allows investors to take long or short, levered or unlevered, positions based on the value of any index. Both Shiller and Masucci were hopeful that MacroShares could help investors hedge all kinds of macroeconomic risks, including exposure to residential housing. The firm had 'battle-tested' two products-- one linked to oil, and one linked to housing -- with mixed success, and was evaluating its strategy going forward. Specifically, Masucci and Shiller wondered whether the MacroShare structure might come to replace the ETF as the predominant technology for index trading.

Keywords:   Macromarkets, Robert Shiller, Macroeconomic risks, Housing risk, Financial innnovation, Macroshares, ETF, Case-Shiller index, futures contracts, Forward contracts

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