Backus–Kehoe–Kydland puzzle

The Backus–Kehoe–Kydland consumption correlation puzzle is the empirical observation that consumption is much less correlated across countries than output. Standard economic theory suggests that country-specific output risks should be collective and domestic consumption growth should not depend strongly on country-specific income shocks. Thus, we should not see the observation that consumption is much less correlated across countries than output; and yet we do.

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Source: List of unsolved problems in economics (CC BY-SA 4.0)