Exchange rate fluctuations and border crossings: evidence from the Swiss-Italian border

Piera Bello (piera.bello@unibg.it)

IdEP Economic Papers from USI Università della Svizzera italiana

Abstract: This paper provides an empirical analysis of the effects of nominal exchange rate fluctuations on cross-border mobility and on retailer firms' sales. Exchange rate shocks may affect the labour supply decisions of cross-border workers and the propensity for consumers to shop across the border. By using hourly data on traffic flows in Ticino, the southernmost canton of Switzerland, and data on Italian supermarkets, I analyse the effects of the Swiss franc appreciation on cross-border travel by both Italian workers and Swiss consumers and on Italian retailers' sales. I find that a 10% appreciation of the Swiss franc increases the number of cars along the border by 1.5-3% more than in the rest of the canton. This effect is found only during specific time intervals, which differ according to the direction of the flow (the early morning from Italy to Switzerland, the afternoon from Switzerland to Italy and late morning for both directions). Moreover, I show that a stronger Swiss Franc positively affects supermarkets' sales in Italian provinces bordering Switzerland. Finally, I provide additional evidence for the labour supply hypothesis by using data on search volumes provided by Google Trends and official statistics on cross-border commuters in Switzerland.

Keywords: Geographic labor mobility; Labor supply; Traffic flows (search for similar items in EconPapers)
JEL-codes: J22 J61 R41 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2017-05-05
New Economics Papers: this item is included in nep-dem, nep-eur, nep-lab and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:lug:wpidep:1701

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