Working Paper

A spectral analysis of the cross-country consumption correlation puzzle


Abstract: Dynamic general equilibrium models predict high cross-country consumption correlations, whereas the data show that output correlations tend to be higher. Spectral decomposition reveals that this ranking varies across frequency bands, with consumption correlations often exceeding output correlations at higher frequencies.

https://doi.org/10.20955/wp.2003.023

Status: Published in Economics Letters, September 2004, 84(3), pp. 341-347

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Provider: Federal Reserve Bank of St. Louis

Part of Series: Working Papers

Publication Date: 2004

Number: 2003-023