Domestic Price, (Expected) Foreign Price, and Travel Spending by Canadians in the United States

Jan Vilasuso and Fredric Menz

Canadian Journal of Economics, 1998, vol. 31, issue 5, 1139-1153

Abstract: In this paper, the authors develop and test a model to explain travel expenditures in the United States by Canadians. The model examines a consumer's choice problem where income is allocated between domestic and foreign consumption. Consumers do not know the foreign price level and base their spending in part on expected foreign price. In addition to expected foreign price, domestic price, exchange rates, income, and foreign price uncertainty influence travel spending. Empirically, each determinant is statistically significant. The contribution of each determinant, however, is not the same: Canadian prices and the exchange rate are the primary factors influencing Canadian travel spending.

Date: 1998
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