SIX PUZZLES

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SIX PUZZLES
By Maurice Obstfeld and
Kenneth Rogoff

• Feldstein-Horioka
• Home-Bias in Trade (Treflers MissingTrade)
• Consumption-Correlation Puzzle
• Purchasing-Power Parity Puzzle
• Meese-Rogoff Forecasting Puzzle
• Home-Bias in Portfolio

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The Feldstein-Horioka Puzzle long time average
national saving rates are highly correlated with
similar averages of domestic investment rates
for OECD countries with high degree of capital
mobility, which seperates saving and investment
decisions.

• The intertemporal-persistent shock explanation
• The portfolio asymmetric- information explanation
• The trade-costs explanation

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A Two-Good Model
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