This paper tests the validity of gravity variables to explain the degree of international consumption risk sharing. Our data show that consumption and output cycles for selected economies in the EU, NAFTA, East Asia and English-speaking countries have synchronized during the four decades since 1950s, but the lack of consumption risk sharing is evident. For the panel of 27 countries our results first show that the gravity variables such as distance, economic size, richness, sharing the same border and sharing the same language are valid in explaining consumption correlations, but among these variables sharing the same border is not significant in explaining output correlation. (The rest is omitted.)

I. Introduction

II. Consumption risk sharing: specification

III. Consumption correlation and output correlation for the world

IV. Consumption risk sharing for 27 countries in the world

V. Regional features

VI. Concluding remarks

Appendix: Data

References