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Real exchange rate fluctuations and the dynamics of retail trade industries on the U.S.-Canada border

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  • Jeffrey R. Campbell
  • Beverly Lapham

Abstract

Consumers living near the U.S.-Canada border can shift their expenditures between the two countries, so real exchange rate fluctuations can act as demand shocks to border areas' retailers. Using annual county-level data, we estimate the effects of real exchange rates on the number of establishments and their average employment in border counties for four retail industries. In three of the four industries we consider, the number of operating establishments responds either contemporaneously or with a lag of one year, so long-run changes in net entry in fact occur quickly enough to matter for short-run fluctuations.

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Paper provided by Federal Reserve Bank of Chicago in its series Working Paper Series with number WP-02-17.

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Date of creation: 2002
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Handle: RePEc:fip:fedhwp:wp-02-17

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Keywords: Foreign exchange rates ; Retail trade;

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References

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Citations

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Cited by:
  1. Jean Boivin & Robert Clark & Nicolas Vincent, 2010. "Virtual Borders: Online Nominal Rigidities and International Market Segmentation," NBER Working Papers 15642, National Bureau of Economic Research, Inc.
  2. Asplund, Björn Marcus & Friberg, Richard & Wilander, Fredrik, 2005. "Demand and Distance: Evidence on Cross-Border Shopping," CEPR Discussion Papers 4983, C.E.P.R. Discussion Papers.
  3. Hosny Zoabi & Philip Saure, 2010. "Effects of Trade on Female Labor Force Participation," DEGIT Conference Papers c015_015, DEGIT, Dynamics, Economic Growth, and International Trade.
  4. Jeffrey R. Campbell & Beverly Lapham, 2002. "Real exchange rate fluctuations and the dynamics of retail trade industries on the U.S.-Canada border," Working Paper Series WP-02-17, Federal Reserve Bank of Chicago.
  5. Mario J. Crucini & Christopher I. Telmer, 2012. "Microeconomic Sources of Real Exchange Rate Variability," NBER Working Papers 17978, National Bureau of Economic Research, Inc.
  6. Friberg, Richard & Paterson, Robert W & Richardson, Andrew D, 2010. "Why is there a home bias? A case study of Wine," CEPR Discussion Papers 7885, C.E.P.R. Discussion Papers.
  7. Isaac Sorkin, . "Are There Long-Run Effects of the Minimum Wage?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  8. Ekholm, Karolina & Moxnes, Andreas & Ulltveit-Moe, Karen Helene, 2012. "Manufacturing restructuring and the role of real exchange rate shocks," Journal of International Economics, Elsevier, vol. 86(1), pages 101-117.
  9. Daniel Aaronson & Eric French & James MacDonald, 2004. "The minimum wage and restaurant prices," Working Paper Series WP-04-21, Federal Reserve Bank of Chicago.
  10. Boivin, Jean & Clark, Robert & Vincent, Nicolas, 2012. "Virtual borders," Journal of International Economics, Elsevier, vol. 86(2), pages 327-335.
  11. Katherine Ho & Matthew Neidell, 2009. "Equilibrium effects of public goods: The impact of community water fluoridation on dentists," NBER Working Papers 15056, National Bureau of Economic Research, Inc.

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