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

Jeffrey Campbell and Beverly Lapham

No 8558, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Consumers living near the U.S.-Canada border can shift their expenditures between the two countries, so real exchange rate fluctuations can act as demand shocks to border areas' retail trade industries. Using annual county-level data, we estimate the effects of real exchange rates on the number of establishments and their average payroll in border counties for four retail industries. In three of the four industries we consider, the number of operating establishments responds either contemporaneously or with a lag of one year to real exchange rate movements. For these industries, the response of retailers' average size is less pronounced. The rapid response of net entry is inconsistent with any model of persistent deviations from purchasing power parity that depends on retailers' costs of changing nominal prices.

JEL-codes: E3 F4 (search for similar items in EconPapers)
Date: 2001-10
New Economics Papers: this item is included in nep-cba, nep-ifn and nep-mac
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Citations: View citations in EconPapers (11)

Published as Campbell, Jeffrey R. and Beverly Lapham. "Real Exchange Rate Fluctuations And The Dynamics Of Retail Trade Industries On The U.S.-Canada Border," American Economic Review, 2004, v94(4,Sep), 1194-1206.

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Related works:
Journal Article: Real Exchange Rate Fluctuations and the Dynamics of Retail Trade Industries on the U. S.-Canada Border (2004)
Working Paper: Real exchange rate fluctuations and the dynamics of retail trade industries on the U.S.-Canada border (2002)
Working Paper: Real Exchange Rate Fluctuations and the Dynamics of Retail Trade Industries on the U.S.-Canada Border (2000)
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