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Real Exchange Rate Fluctuations and the Dynamics of Retail Trade Industries on the U. S.-Canada Border

  • Jeffrey R. Campbell
  • Beverly Lapham

This paper examines the effects of U.S.-Canadian real exchange rate movements on U.S. retail trade industries in states that border Canada. Using county level data, we focus on the effects on the number of establishments, employment, and payroll in two-digit and three-digit level retail trade industries. We expect fluctuations in the the real exchange rate to affect these variables as movements in these relative price series impact on the incidence of cross-border shopping. This, in turn, affects the demand facing retailers located in each country. Our results suggest that for many of the industries in our sample, real exchange rates have a significant effect on these variables and these effects vary across industries.

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Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 94 (2004)
Issue (Month): 4 (September)
Pages: 1194-1206

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Handle: RePEc:aea:aecrev:v:94:y:2004:i:4:p:1194-1206
Note: DOI: 10.1257/0002828042002723
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