A re-examination of the border effect
By: Yuriy Gorodnichenko, Linda Tesar.
Contributors: Tesar, Linda L. 1961-; National Bureau of Economic Research.
Series: NBER working paper series ;; working paper 11706; Working paper series (National Bureau of Economic Research : Online) ;; working paper no. 11706.
Publisher: National Bureau of Economic Research
Published: 2005
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Subjects: Prices -- Mathematical models; Foreign exchange rates -- Mathematical models; International trade -- Mathematical models; Boundaries -- Economic aspects -- Mathematical models; Prices -- United States; Prices -- Canada; Prices -- Japan
Description: "This paper reexamines the evidence on the border effect, the finding that the border drives a wedge between domestic and foreign prices.  We argue that the border effect can be inflated by the volatility and persistence of the nominal exchange rate and by the cross-country heterogeneity in the distribution of within-country price differentials.  We develop a simple framework to separate the border effect from these confounding factors.  Using price data from Engel and Rogers (1996) and Parsley and Wei (2001), we show that after controlling for the confounding factors the border effect between the U.S.  and Canada and the U.S.  and Japan is negligible"--National Bureau of Economic Research web site.
Notes: Includes bibliographical references.
Title from PDF file as viewed on 11/28/2005.
Also available in print.
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Mode of access: World Wide Web.