2006, English edition: Domestic and foreign influences on Canadian prices over exchange rate cycles, 1974 to 1996 [electronic resource] / by John R. Baldwin and Beiling Yan. Baldwin, John R. (John Russel)

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Domestic and foreign influences on Canadian prices over exchange rate cycles, 1974 to 1996 / by John R. Baldwin and Beiling Yan
 
Bookmark: http://trove.nla.gov.au/version/197293758
Physical Description
  • electronic text.
  • Electronic monograph in PDF format.
Published
  • Ottawa : Micro-economic Analysis Division, Statistics Canada, 2006.
Language
  • English

Edition details

Title
  • Domestic and foreign influences on Canadian prices over exchange rate cycles, 1974 to 1996 /​ by John R. Baldwin and Beiling Yan.
Also Titled
  • Statistics Canada (English)
Creator
  • Baldwin, John R. (John Russel)
Other Creators
  • Yan, Beiling.
  • Statistics Canada. Micro-Economic Analysis Division.
  • Statistics Canada. Analytical Studies Branch.
  • Government of Canada.
Published
  • Ottawa : Micro-economic Analysis Division, Statistics Canada, 2006.
Medium
  • [electronic resource]
Physical Description
  • electronic text.
  • Electronic monograph in PDF format.
Series
Subjects
Summary
  • The paper examines the pricing behaviour of 81 Canadian manufacturing industries from 1974 to 1996. It explores the domestic and foreign factors that affect price formation in Canada and the circumstances in which Canadian prices respond to foreign (U.S.) influences (the law of one price), as opposed to domestic factors (i.e., labour, energy costs and productivity growth). It finds that: (1) Canadian manufacturing prices are, on average, set using a mixture of a cost mark-up pricing rule and the law-of-one-price rule: both domestic factors (such as input prices and productivity) and foreign factors (such as competing U.S. prices) exert important influences on Canadian prices; (2) Canadian prices are more sensitive to U.S. prices if the industry faces higher import competition and if home and foreign products are less differentiated. Compared to prices of domestic products, prices of imported foreign products are more responsive to foreign prices. However, the price of imports also responds to Canadian prices; though this pricing-to-market phenomenon is reduced as imports increase in importance; (3) Industry differences exist. Domestic prices respond more to productivity changes in industries where competition is more intense and where products are more homogeneous. Imports respond more to domestic factors when they account for a smaller share of the domestic market; (4) As the pressure from foreign markets increases, in a period of an appreciating Canadian dollar, changes in prices are influenced more by fluctuations in foreign prices. In comparison, when the pressure from foreign markets decreases, in a period of a depreciating Canadian dollar, changes in Canadian prices are more responsive to input cost changes at home. Disequilibria that were generated by previous shocks are overcome more quickly during periods when the exchange rate appreciated. The paper examines the pricing behaviour of 81 Canadian manufacturing industries from 1974 to 1996. It explores the domestic and foreign factors that affect price formation in Canada and the circumstances in which Canadian prices respond to foreign (U.S.) influences (the law of one price), as opposed to domestic factors (i.e., labour, energy costs and productivity growth). It finds that: (1) Canadian manufacturing prices are, on average, set using a mixture of a cost mark-up pricing rule and the law-of-one-price rule: both domestic factors (such as input prices and productivity) and foreign factors (such as competing U.S. prices) exert important influences on Canadian prices; (2) Canadian prices are more sensitive to U.S. prices if the industry faces higher import competition and if home and foreign products are less differentiated. Compared to prices of domestic products, prices of imported foreign products are more responsive to foreign prices. However, the price of imports also responds to Canadian prices; though this pricing-to-market phenomenon is reduced as imports increase in importance; (3) Industry differences exist. Domestic prices respond more to productivity changes in industries where competition is more intense and where products are more homogeneous. Imports respond more to domestic factors when they account for a smaller share of the domestic market; (4) As the pressure from foreign markets increases, in a period of an appreciating Canadian dollar, changes in prices are influenced more by fluctuations in foreign prices. In comparison, when the pressure from foreign markets decreases, in a period of a depreciating Canadian dollar, changes in Canadian prices are more responsive to input cost changes at home. Disequilibria that were generated by previous shocks are overcome more quickly during periods when the exchange rate appreciated.
Notes
  • Title from title screen (viewed Nov. 30, 2006).
  • "Research paper."
  • Electronic monograph in PDF format.
  • Issued also in French under title: Influences intérieures et étrangères sur les prix canadiens selon les mouvements cycliques du taux de change, 1974 à 1996.
Language
  • English
ISBN
  • 9780662441441
Libraries Australia ID
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