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

Listed author(s):
  • 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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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/0002828042002723
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File URL: http://www.aeaweb.org/aer/contents/appendices/sept04_data_campbell.pdf
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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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  1. Carlton, Dennis W, 1986. "The Rigidity of Prices," American Economic Review, American Economic Association, vol. 76(4), pages 637-658, September.
  2. Engel, C. & Rogers, J.H., 1995. "How Wide is the Border?," Papers 4-95-16, Pennsylvania State - Department of Economics.
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  6. 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.
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  19. C.J. Krizan & John Haltiwanger & Lucia Foster, 2002. "The Link Between Aggregate and Micro Productivity Growth: Evidence from Retail Trade," Working Papers 02-18, Center for Economic Studies, U.S. Census Bureau.
  20. Eden, Benjamin, 1994. "The Adjustment of Prices to Monetary Shocks When Trade Is Uncertain and Sequential," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 493-509, June.
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  23. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-1150, September.
  24. James M. MacDonald & Daniel Aaronson, 2000. "How do retail prices react to minimum wage increases?," Working Paper Series WP-00-20, Federal Reserve Bank of Chicago.
  25. Caballero, Ricardo J & Hammour, Mohamad L, 1994. "The Cleansing Effect of Recessions," American Economic Review, American Economic Association, vol. 84(5), pages 1350-1368, December.
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