THE CAUSES OF INTRA-INDUSTRY TRADE BETWEEN THE U.S. AND CANADA:TIME-SERIES APPROACH WITH A GRAVITY MODEL

Abstract

This study proposes alternative reasons to explain an asymmetric intra-industry trade for agricultural products between Canada and the United States after the free trade agreement became effective. Using time-series data, a gravity model is developed which enables us to examine the significance of exchange rates and different trade patterns on bilateral trade.