Advanced Search
MyIDEAS: Login to save this paper or follow this series

Economic Integration, Business Cycle, and Productivity in North America

Contents:

Author Info

  • M. Ayhan Kose
  • Roberto Cardarelli

Abstract

This paper examines the effect of the major Canada-U.S. trade agreements on the dynamics of business cycles and productivity in Canada. The North American Free Trade Agreement (NAFTA) and its predecessor, the Canada-U.S. Free Trade Agreement (CUSFTA), have led to a substantial expansion of trade flows. Although common factors have played a larger role in explaining business cycles in Canada and the United States since the early 1980s, country-specific and idiosyncratic factors remain important for Canada. At the same time, while increased trade integration seems to have positively contributed to total factor productivity of Canadian industries, the persistence of structural differences between the two countries has prevented convergence of aggregate labor productivity. While these findings seem to weigh against moving toward a monetary union, they also suggest that substantial benefits could be reaped from further reducing remaining barriers to trade.

Download Info

If 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.
File URL: http://www.imf.org/external/pubs/cat/longres.aspx?sk=17559
Download Restriction: no

Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/138.

as in new window
Length: 46
Date of creation: 01 Aug 2004
Date of revision:
Handle: RePEc:imf:imfwpa:04/138

Contact details of provider:
Postal: International Monetary Fund, Washington, DC USA
Phone: (202) 623-7000
Fax: (202) 623-4661
Email:
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC

Order Information:
Web: http://www.imf.org/external/pubs/pubs/ord_info.htm

Related research

Keywords: Productivity; business cycles; free trade; business cycle; trade flows; trade agreements; economic integration; trade agreement; free trade agreement; idiosyncratic factors; industry trade; increased trade; vertical specialization; international trade; gdp growth; growth accounting; total factor free trade agreements; regional trade; output volatility; rules of origin; growth rates; vertical integration; exchange rate regime; real gdp; world economy; trade integration; merchandise trade; average tariffs; trade diversion; investment flows; business cycle fluctuations; trade volume; bilateral trade; net exports; intellectual property rights; per capita income; dispute settlement; business cycle variation; domestic investment; trade in services; trade intensity; export orientation; monetary union; trade sector; mfn tariffs; trade barriers; trade liberalization; impact of trade; trade creation; economic growth; dynamic gains; fixed capital formation; intellectual property; border trade; output growth; trade theories; nontariff barriers; protection of intellectual property rights; capital formation; deeper trade integration; affected industries; international trade agreements; member country; bilateral agreements; tariff cuts; export value; external shocks; business cycle dynamics; common market; trade share; trade links; gross domestic product; preliminary assessment; oil prices; global trade; open economy; world exports; world trade; independent trade policy; bilateral trade flows; trade area; efficient firms; idiosyncratic ? factors; economic cooperation; preferential tariff; foreign trade; gross fixed capital formation; dispute settlement mechanism; metal products; free trade area; aggregate trade; trade effects; transport equipment; tariff-free trade; trade patterns; dispute settlement mechanisms; domestic market; commodity prices; tariff rates; aggregate trade flows; market integration; governing investment; intermediate inputs; regulatory framework; imported intermediate;

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Anne O. Krueger, 1999. "Trade Creation and Trade Diversion Under NAFTA," NBER Working Papers 7429, National Bureau of Economic Research, Inc.
  2. Robert J. Gordon, 2003. "Hi-tech Innovation and Productivity Growth: Does Supply Create Its Own Demand?," NBER Working Papers 9437, National Bureau of Economic Research, Inc.
  3. Murray, John, 2000. "Why Canada needs a flexible exchange rate," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 11(1), pages 41-60, August.
  4. Carr, Jack L. & Floyd, John E., 2002. "Real and monetary shocks to the Canadian dollar: Do Canada and the United States form an optimal currency area?," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 13(1), pages 21-39, May.
  5. Bayoumi, Tamim & Eichengreen, Barry, 1994. "Monetary and exchange rate arrangements for NAFTA," Journal of Development Economics, Elsevier, Elsevier, vol. 43(1), pages 125-165, February.
  6. Stephen D. Oliner & Daniel E. Sichel, 2002. "Information technology and productivity: where are we now and where are we going?," Finance and Economics Discussion Series, Board of Governors of the Federal Reserve System (U.S.) 2002-29, Board of Governors of the Federal Reserve System (U.S.).
  7. repec:rus:hseeco:123092 is not listed on IDEAS
  8. James H. Stock & Mark W. Watson, 2003. "Understanding Changes in International Business Cycle Dynamics," NBER Working Papers 9859, National Bureau of Economic Research, Inc.
  9. Jonathan Heathcote & Fabrizio Perri, 2003. "Why Has the U.S. Economy Become Less Correlated with the Rest of the World?," American Economic Review, American Economic Association, American Economic Association, vol. 93(2), pages 63-69, May.
  10. Guiso, Luigi & Sapienza, Paola & Zingales, Luigi, 2002. "Does Local Financial Development Matter?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3307, C.E.P.R. Discussion Papers.
  11. Danny Leung, 2004. "The Effect of Adjustment Costs and Organizational Change on Productivity in Canada: Evidence from Aggregate Data," International Productivity Monitor, Centre for the Study of Living Standards, Centre for the Study of Living Standards, vol. 9, pages 52-61, Fall.
  12. Kalemli-Ozcan, S. & Sorensen, B.E. & Yosha, O., 1999. "Risk Sharing and Industrial Specialization: Regional and International Evidence," Papers, Tel Aviv 16-99, Tel Aviv.
  13. Robert E. Hall & Charles I. Jones, 1996. "The Productivity of Nations," NBER Working Papers 5812, National Bureau of Economic Research, Inc.
  14. Murray, John & Schembri, Lawrence & St-Amant, Pierre, 2003. "Revisiting the case for flexible exchange rates in North America," The North American Journal of Economics and Finance, Elsevier, Elsevier, vol. 14(2), pages 207-240, August.
  15. Kose, M. Ayhan & Prasad, Eswar & Terrones, Marco E., 2003. "How Does Globalization Affect the Synchronization of Business Cycles?," IZA Discussion Papers 702, Institute for the Study of Labor (IZA).
  16. Brian M. Doyle & Jon Faust, 2003. "Breaks in the variability and co-movement of G-7 economic growth," International Finance Discussion Papers, Board of Governors of the Federal Reserve System (U.S.) 786, Board of Governors of the Federal Reserve System (U.S.).
  17. Alexandre Debs, 2001. "Testing for a Structural Break in the Volatility of Real GDP Growth in Canada," Working Papers, Bank of Canada 01-9, Bank of Canada.
  18. David Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, Federal Reserve Bank of New York, issue Jun, pages 79-99.
  19. Benoit Robidoux, 2003. "Future Productivity Growth in Canada: The Role of the Service Sector," International Productivity Monitor, Centre for the Study of Living Standards, Centre for the Study of Living Standards, vol. 7, pages 58-65, Fall.
  20. Gary Clyde Hufbauer & Jeffrey J. Schott, 1992. "North American Free Trade: Issues and Recommendations," Peterson Institute Press: All Books, Peterson Institute for International Economics, Peterson Institute for International Economics, number 71, July.
  21. M. Ayhan Kose & Christopher M. Towe & Guy Meredith, 2004. "How Has Nafta Affected the Mexican Economy? Review and Evidence," IMF Working Papers 04/59, International Monetary Fund.
  22. Kimberly A. Clausing, 2001. "Trade creation and trade diversion in the Canada - United States Free Trade Agreement," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 34(3), pages 677-696, August.
  23. Olivier Blanchard & John Simon, 2001. "The Long and Large Decline in U.S. Output Volatility," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 32(1), pages 135-174.
  24. M. Ayhan Kose & Kei-Mu Yi, 2001. "International Trade and Business Cycles: Is Vertical Specialization the Missing Link?," American Economic Review, American Economic Association, American Economic Association, vol. 91(2), pages 371-375, May.
  25. Lafrance, Robert & St-Amant, Pierre, 1999. "Optimal Currency Areas: A Review of the Recent Literature," Working Papers, Bank of Canada 99-16, Bank of Canada.
  26. Tiff Macklem, 2003. "Future Productivity Growth in Canada: Comparing to the United States," International Productivity Monitor, Centre for the Study of Living Standards, Centre for the Study of Living Standards, vol. 7, pages 50-57, Fall.
  27. Hashmat Khan & Marjorie Santos, 2002. "Contribution of ICT Use to Output and Labour-Productivity Growth in Canada," Working Papers, Bank of Canada 02-7, Bank of Canada.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Ramon A. CASTILLO PONCE & Ramon de Jesus RAMIREZ ACOSTA, 2008. "Economic Integration In North America," Applied Econometrics and International Development, Euro-American Association of Economic Development, Euro-American Association of Economic Development, vol. 8(2), pages 111-122.
  2. Marcello M. Estevão & Evridiki Tsounta, 2010. "Canada's Potential Growth," IMF Working Papers 10/13, International Monetary Fund.
  3. Kajal Lahiri & Gultekin Isiklar, 2010. "Estimating International Transmission of Shocks Using GDP Forecasts: India and Its Trading Partners," Discussion Papers, University at Albany, SUNY, Department of Economics 10-06, University at Albany, SUNY, Department of Economics.
  4. Louis, Rosmy J & Brown, Ryan & Balli, Faruk, 2009. "Are Mortgage Rates Bubbling Up Trouble for Canadas Metropolitan Housing Sector?," MPRA Paper 17245, University Library of Munich, Germany.
  5. Claudio Bravo-Ortega AND Julian di Giovanni, 2004. "Trade Costs and Real Exchange Rate Volatility," Econometric Society 2004 Latin American Meetings, Econometric Society 227, Econometric Society.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:04/138. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow) or (Hassan Zaidi).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.