A puzzle in macroeconomics

Macroeconomics

Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...

 is a situation where the outcome of theory is inconsistent with observed macroeconomic data.

An example might be the Equity premium puzzle

Equity premium puzzle

The equity premium puzzle is a term coined in 1985 by economists Rajnish Mehra and Edward C. Prescott. It is based on the observation that in order to reconcile the much higher returns of stocks compared to government bonds in the United States, individuals must have implausibly high risk aversion...

 which relates to the fact that over the last two hundred years, the risk premium

Risk premium

A risk premium is the minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk-free asset, in order to induce an individual to hold the risky asset rather than the risk-free asset...

 of stocks over bonds has been around 5.5 %, much larger than expected from theory. Equity Premium Puzzle was first documented by Mehra and Prescot (1985).

List of puzzles

• Equity premium puzzle
  Equity premium puzzle
  The equity premium puzzle is a term coined in 1985 by economists Rajnish Mehra and Edward C. Prescott. It is based on the observation that in order to reconcile the much higher returns of stocks compared to government bonds in the United States, individuals must have implausibly high risk aversion...
  
  
• 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....
  
  
• equity home bias puzzle
  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 only modest amounts of foreign equity. This is puzzling since observed returns on national equity portfolios suggest substantial benefits from international diversification...
  
  
• consumption correlations puzzle
• Feldstein-Horioka puzzle
  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. According to economic theory, if we assume that investors that are able to easily invest anywhere in the world, they ...
  
  
• Real exchange rate puzzles
  Real exchange rate puzzles
  The real exchange-rate puzzles is a common term for two much-discussed anomalies of real exchange rates: that real exchange rates are more volatile and show more persistence than what most models can account for...
  
  
• Retirement-consumption puzzle
• Missing trade puzzle, also known as Border puzzle