A Provincial View of Economic Integration

Michael Klein and Tamim Bayoumi

No 1997/041, IMF Working Papers from International Monetary Fund

Abstract: This paper develops a method of testing levels of economic integration based upon consumption smoothing, and tests it using data on trade balances across Canadian provinces. The results indicate the provinces are highly integrated within Canada, but integration between Canada and the rest of the world is partial. Provincial trade balances respond only about half as much to events in the rest of the world as they do to events within Canada. In short, national borders appear to matter for intertemporal trade.

Keywords: WP; utility function; Consumption smoothing; economic integration; income coefficient; trade balance equation; OECD income; coefficient restriction; trade balance response; OECD aggregate; Income; Trade balance; Consumption; Government consumption (search for similar items in EconPapers)
Pages: 29
Date: 1997-04-01
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Citations: View citations in EconPapers (37)

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