Exchange Rate Cycles and Canada/US Manufacturing Prices
AbstractDuring the post-1970 period, Canadian manufacturing prices have alternately increased and fallen relative to U.S. prices' just the reverse of the cycle in the Canada' U.S. exchange rate. But not all manufacturing industries have experienced the same amplitude of relative price changes. This paper examines the industry characteristics that are related to the shifts in competitiveness, measured as the relative price ratio between Canadian prices and U.S. prices adjusted by the exchange rate. We find that relative factor input costs and relative productivity growth are the two most important factors influencing changes in relative Canada' U.S. prices. Competitive pressures emanating from trade are important determinants of the extent to which relative productivity differences are passed through to cross-country relative prices in the manufacturing sector. We also find that the magnitude of domestic market competition and export intensity affects the short-run relative price shifts over the cycle of exchange rate.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Springer in its journal Review of World Economics.
Volume (Year): 143 (2007)
Issue (Month): 3 (October)
Contact details of provider:
Postal: Hindenburgufer 66, D-24105 Kiel
Phone: +49 431 8814-1
Fax: +49 431 8814528
Web page: http://link.springer.de/link/service/journals/10290/index.htm
More information through EDIRC
Other versions of this item:
- Baldwin, John R. Yan, Beiling, 2006. "Exchange Rate Cycles and Canada- U.S. Manufacturing Prices," Economic Analysis (EA) Research Paper Series 2006041e, Statistics Canada, Analytical Studies Branch.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert C. Feenstra, 1989. "Trade Policies for International Competitiveness," NBER Books, National Bureau of Economic Research, Inc, number feen89-1.
- John R. Baldwin & Beiling Yan, 2004. "The Law of One Price: A Canada/U.S. exploration," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(1), pages 1-10, 03.
- Joseph E. Gagnon & Michael M. Knetter, 1992.
"Markup Adjustment and Exchange Rate Fluctuations: Evidence From Panel Data on Automobile Exports,"
NBER Working Papers
4123, National Bureau of Economic Research, Inc.
- Gagnon, Joseph E. & Knetter, Michael M., 1995. "Markup adjustment and exchange rate fluctuations: evidence from panel data on automobile exports," Journal of International Money and Finance, Elsevier, vol. 14(2), pages 289-310, April.
- Stanley W. Kardasz & Kenneth R. Stollery, 2001. "Exchange rate pass-through and its determinants in Canadian manufacturing industries," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 719-738, August.
- John A. Karikari, 1988. "International Competitiveness and Industry Pricing in Canadian Manufacturing," Canadian Journal of Economics, Canadian Economics Association, vol. 21(2), pages 410-26, May.
- Kenneth Rogoff, 1996. "The Purchasing Power Parity Puzzle," Journal of Economic Literature, American Economic Association, vol. 34(2), pages 647-668, June.
- Alexius, Annika, 1999. "Sources of Real Exchange Rate Fluctuations in the Nordic Countries," Working Paper Series 90, Sveriges Riksbank (Central Bank of Sweden).
- Baldwin,John R. & Gorecki,Paul With contributions by-Name:Caves,Richard E. With contributions by-Name:Dunne,Tim With contributions by-Name:Haltiwanger,John, 1998.
"The Dynamics of Industrial Competition,"
Cambridge University Press, number 9780521633574, November.
- Baldwin, Richard, 1988.
"Hyteresis in Import Prices: The Beachhead Effect,"
American Economic Review,
American Economic Association, vol. 78(4), pages 773-85, September.
- Marston, Richard C., 1990. "Pricing to market in Japanese manufacturing," Journal of International Economics, Elsevier, vol. 29(3-4), pages 217-236, November.
- Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997.
"Goods Prices and Exchange Rates: What Have We Learned?,"
Journal of Economic Literature,
American Economic Association, vol. 35(3), pages 1243-1272, September.
- Pinelopi K. Goldberg & Michael M. Knetter, 1996. "Goods Prices and Exchange Rates: What Have We Learned?," NBER Working Papers 5862, National Bureau of Economic Research, Inc.
- Dixit, Avinash K, 1989. "Hysteresis, Import Penetration, and Exchange Rate Pass-Through," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 205-28, May.
- Baldwin, John R. Harchaoui, Tarek, 2002. "Productivity Growth in Canada," Productivity Growth in Canada, Statistics Canada, Economic Analysis Division, number stcb6e, May.
- Menon, Jayant, 1995. " Exchange Rate Pass-Through," Journal of Economic Surveys, Wiley Blackwell, vol. 9(2), pages 197-231, June.
- Feinberg, Robert M, 1989. "The Effects of Foreign Exchange Movements on U.S. Domestic Prices," The Review of Economics and Statistics, MIT Press, vol. 71(3), pages 505-11, August.
- Paul Krugman, 1986. "Pricing to Market when the Exchange Rate Changes," NBER Working Papers 1926, National Bureau of Economic Research, Inc.
- Stanley W. Kardasz & Kenneth R. Stollery, 1998. "Determinants of domestic and import prices in Canadian manufacturing industries," Empirical Economics, Springer, vol. 23(4), pages 593-610.
- Subramanian Rangan & Robert Z. Lawrence, 1993. "The Responses of U.S. Firms to Exchange Rate Fluctuations: Piercing the Corporate Veil," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 341-379.
- Knetter, Michael M, 1989. "Price Discrimination by U.S. and German Exporters," American Economic Review, American Economic Association, vol. 79(1), pages 198-210, March.
- Kenneth A. Froot & Kenneth Rogoff, 1996.
"Perspectives on PPP and Long-Run Real Exchange Rates,"
NBER Working Papers
4952, National Bureau of Economic Research, Inc.
- Froot, Kenneth A. & Rogoff, Kenneth, 1995. "Perspectives on PPP and long-run real exchange rates," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 32, pages 1647-1688 Elsevier.
- Frankel, Jeffrey A. & Rose, Andrew K., 1995. "Empirical research on nominal exchange rates," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 33, pages 1689-1729 Elsevier.
- Kasa, Kenneth, 1992. "Adjustment costs and pricing-to-market theory and evidence," Journal of International Economics, Elsevier, vol. 32(1-2), pages 1-30, February.
- Bloch, H., 1991.
"Pricing in Australian Manufacturing,"
1991-07, Tasmania - Department of Economics.
- Sven W. Arndt & J. David Richardson, 1988. "Real-Financial Linkages Among Open Economies," NBER Working Papers 2230, National Bureau of Economic Research, Inc.
- Baldwin, John R. Maynard, Jean-Pierre Tanguay, Marc Wong, Fanny Yan, Beiling, 2005. "A Comparison of Canadian and U.S. Productivity Levels: An Exploration of Measurement Issues," Economic Analysis (EA) Research Paper Series 2005028e, Statistics Canada, Analytical Studies Branch.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F Baum).
If references are entirely missing, you can add them using this form.