Working Paper

Regionalization and home bias: the case of Canada

Abstract: The bilateral trade flows between Canada and the U.S. are the world's largest and have grown rapidly in the 1990s. Are they evidence of a North American trading bloc? A gravity model of trade finds that while economic size and proximity can explain much of the substantial trade between Canada and the U.S., Canada's merchandise trade exhibits a significant U.S. bias. The model also reveals that trade between Canada's provinces is 31 times that between a province and a country other than the U.S., significantly higher than estimates of Canada's home bias relative to the U.S.

Keywords: Canada; International trade;

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 1998

Number: 98-16