Home bias in trade puzzle
- Home bias in trade puzzle
The Home bias in trade puzzle is a widely-discussed problem in macroeconomics and international finance, first documented by John T. McCallum in an article from 1995.[citation | last1 = McCallum| first1 = John T. | year=1995 |title= National Borders Matter: Canada-U.S. Regional Trade Patterns | journal = American Economic Review | volume = 85 | pages = 615-623] ]McCallum showed that for the United States and Canada, inter-province trade is 20 times larger than international trade, holding other determinants of trade fixed. Subsequent estimates have whittled this bias down to 6 to 12. This home bias in trade has later been documented among OECD countries.Fact|date=November 2007 The preferred explanation for this finding has been the presence of formal and informal trade barriers following national borders.
If presence of formal and informal trade barriers following national borders was the sole reason for this puzzle, home bias should not exist on the subnational level. Wolf (2000)[citation | last1 = Wolf| first1 = Holger C. | year=2000|title= Intranational Home Bias in Trade | journal = Review of Economics and Statistics | volume = 82 | number=4| pages = 555-563] finds, however, that home bias is present also within U.S. states.]Maurice Obstfeld and Kenneth Rogoff identifies this as one of the six major puzzles in international economics.[Citation | last= Obsfeld | first= Maurice | last2= Rogoff | first2= Kenneth | year= 2000| editor-last= Bernanke | editor-first= Ben | editor2-last= Rogoff | editor2-first= Kenneth | contribution= The Six Major Puzzles in International Macroeconomics: Is There a Common Cause? | title=NBER Macroeconomics Annual 2000 | volume = 15 | pages = 339-390 | publisher= The MIT Press | isbn = 0-262-02503-5] The others are the Feldstein-Horioka puzzle, the equity home bias puzzle, the consumption correlations puzzle, the purchasing power and exchange rate disconnect puzzle, and the Baxter-Stockman neutrality of exchange rate regime puzzle.] References
Wikimedia Foundation.
2010.
Look at other dictionaries:
Equity home bias puzzle — The Equity home bias puzzle is the term given to describe the fact that individuals and institutions in most countries hold modest amounts of foreign equity. This is puzzling since observed returns on national equity portfolios suggest… … Wikipedia
Backus-Kehoe-Kydland puzzle — In economics, the Backus Kehoe Kydland consumption correlation puzzle, also known as the BKK puzzle, is the observation that consumption is much less correlated across countries than output.In an Arrow Debreu economy, i.e. an economy with a… … Wikipedia
Backus–Kehoe–Kydland puzzle — In economics, the Backus–Kehoe–Kydland consumption correlation puzzle, also known as the BKK puzzle, is the observation that consumption is much less correlated across countries than output. In an Arrow–Debreu economy, i.e. an economy with a… … Wikipedia
Feldstein-Horioka puzzle — The Feldstein Horioka puzzle is a widely discussed problem in macroeconomics and international finance, first documented by Martin Feldstein and Charles Horioka in an 1980 paper.citation | last1 = Feldstein | first1 = Martin | last2 = Horioka |… … Wikipedia
List of unsolved problems in economics — This is a list of some of the major unsolved problems, puzzles, or questions in economics. Some of these are theoretical in origin and some of them concern the inability of standard economic theory to explain an empirical observation. Contents 1… … Wikipedia
Colm Kearney — Professor Colm Kearney is a professor of international business at Trinity College, Dublin. Contents 1 Background 2 Academic Career and Interests 3 Personal 4 … Wikipedia
ancient Greek civilization — ▪ historical region, Eurasia Introduction the period following Mycenaean civilization, which ended in about 1200 BC, to the death of Alexander the Great, in 323 BC. It was a period of political, philosophical, artistic, and scientific… … Universalium
India — /in dee euh/, n. 1. Hindi, Bharat. a republic in S Asia: a union comprising 25 states and 7 union territories; formerly a British colony; gained independence Aug. 15, 1947; became a republic within the Commonwealth of Nations Jan. 26, 1950.… … Universalium
Europe, history of — Introduction history of European peoples and cultures from prehistoric times to the present. Europe is a more ambiguous term than most geographic expressions. Its etymology is doubtful, as is the physical extent of the area it designates.… … Universalium
pre-Columbian civilizations — Introduction the aboriginal American Indian (Mesoamerican Indian) cultures that evolved in Meso America (part of Mexico and Central America) and the Andean region (western South America) prior to Spanish exploration and conquest in the 16th … Universalium
