Relative Price Volatility: What Role Does the Border Play?

30 Pages Posted: 3 Mar 1999

See all articles by Charles M. Engel

Charles M. Engel

University of Wisconsin - Madison - Department of Economics; National Bureau of Economic Research (NBER); University of Washington - Department of Economics

John H. Rogers

Board of Governors of the Federal Reserve System - Trade and Financial Studies Section

Abstract

We reexamine the effect of the U.S./Canadian border on integration of markets. The paper updates work from our earlier paper, Engel and Rogers (1996). We consider alternative measures of deviations from the law of one price. We pay special attention to the effect of the U.S.-Canada free trade agreement on market integration. Our conclusions are unchanged: markets in the U.S. and Canada are more segmented than can be explained by the physical distance between the locations. Formal trade barriers do not appear to explain much of that segmentation.

JEL Classification: E3, F4

Suggested Citation

Engel, Charles M. and Rogers, John H., Relative Price Volatility: What Role Does the Border Play?. Available at SSRN: https://ssrn.com/abstract=148294 or http://dx.doi.org/10.2139/ssrn.148294

Charles M. Engel (Contact Author)

University of Wisconsin - Madison - Department of Economics ( email )

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Madison, WI 53706
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608-262-3697 (Phone)
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National Bureau of Economic Research (NBER)

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University of Washington - Department of Economics ( email )

Box 353330
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206-543-6197 (Phone)
206-685-7477 (Fax)

John H. Rogers

Board of Governors of the Federal Reserve System - Trade and Financial Studies Section ( email )

20th St. and Constitution Ave.
Washington, DC 20551
United States
202-452-2873 (Phone)
202-736-5638 (Fax)

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