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Border Effects Before and After 9/11: Panel Data Evidence Across Industries

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Abstract

We build a unique industry-level panel data set to estimate border effects with respect to U.S.-Canada trade for each year from 1992 to 2005. Estimates from data aggregated at the province/state level yield border effects in the early 1990s that increase slightly and then decline after the implementation of the North American Free Trade Agreement (NAFTA), but significantly increase after 2001. Results based on three digit NAICS level data reveal higher border effects in the early 1990s and considerable heterogeneity across industries. These results imply that the tragic events of 9/11 had considerable adverse impacts for U.S.-Canada trade.

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Bibliographic Info

Paper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 12-02.

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Length: 31 pages
Date of creation: 15 Feb 2012
Date of revision:
Publication status: Published: Carleton Economic Papers
Handle: RePEc:car:carecp:12-02

Note: F1, F11, F14
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Keywords: border effects; interprovincial trade; inter-state trade; border security; NAFTA; 9/11;

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  15. Keith Head & Thierry Mayer, 2004. "Non-Europe : the magnitude and causes of market fragmentation in the EU," Cahiers de la Maison des Sciences Economiques bla99004a, Université Panthéon-Sorbonne (Paris 1).
  16. McCallum, John, 1995. "National Borders Matter: Canada-U.S. Regional Trade Patterns," American Economic Review, American Economic Association, vol. 85(3), pages 615-23, June.
  17. Carolyn L. Evans, 2001. "Border effects and the availability of domestic products abroad," Staff Reports 127, Federal Reserve Bank of New York.
  18. Bergstrand, Jeffrey H, 1990. "The Heckscher-Ohlin-Samuelson Model, the Linder Hypothesis and the Determinants of Bilateral Intra-industry Trade," Economic Journal, Royal Economic Society, vol. 100(403), pages 1216-29, December.
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