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.
Subsequent estimates by John F. Helliwell and others have whittled this bias down to a factor from 6 to 12.
[citation needed] 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.
Maurice Obstfeld and Kenneth Rogoff identify this as one of the six major puzzles in international economics.