A Provincial View of Economic Integration

ByMichael W Klein, Tamim Bayoumi

April 1, 1997

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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 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.

Subject: Consumption, Economic integration, Government consumption, Income, International trade, National accounts, Trade balance

Keywords: coefficient restriction, Consumption, Consumption smoothing, economic integration, Government consumption, Income, income coefficient, OECD aggregate, OECD income, Trade balance, trade balance equation, trade balance response, utility function, WP

Pages:
29
Volume:
1997
DOI:
https://doi.org/10.5089/9781451846065.001
Issue:
041
Series:
Working Paper No. 1997/041
Stock No:
WPIEA0411997
ISBN:
9781451846065
ISSN:
1018-5941

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Notes

Also published in Staff Papers, Vol. 44, No. 4, December 1997.

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