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Economic Integration, Business Cycle, and Productivity in North America

Author/Editor: Cardarelli, Roberto | Kose, M. Ayhan
Authorized for Distribution: August 1, 2004
Electronic Access: Free Full Text (PDF file size is 677KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: This paper examines the effect of the major Canada-U.S. trade agreements on the dynamics of business cycles and productivity in Canada. The North American Free Trade Agreement (NAFTA) and its predecessor, the Canada-U.S. Free Trade Agreement (CUSFTA), have led to a substantial expansion of trade flows. Although common factors have played a larger role in explaining business cycles in Canada and the United States since the early 1980s, country-specific and idiosyncratic factors remain important for Canada. At the same time, while increased trade integration seems to have positively contributed to total factor productivity of Canadian industries, the persistence of structural differences between the two countries has prevented convergence of aggregate labor productivity. While these findings seem to weigh against moving toward a monetary union, they also suggest that substantial benefits could be reaped from further reducing remaining barriers to trade.
 
Series: Working Paper No. 04/138
Subject(s): Business cycles | Canada | United States | Productivity | Trade | International trade agreements | North America
Author's keyword(s): Canada | United States | Business Cycles | Productivity | NAFTA | CUSFTA | Regional Trade
 
English  
    Published:   August 1, 2004        
    ISBN/ISSN:   1934-7073   Format:   Paper
    Stock No:   WPIEA1382004   Pages:   46
    Price:   US$15.00
       
     
Please address any questions about this title to publications@imf.org.