Beverly Lapham, Queen’s University

Sala 209

“A Gravity Approach to Cross-border Travel”

Coautoreado con Jen Baggs y Loretta Fung

Abstract: We use a structural gravity approach to quantify the effects of variables which impact shortterm travel across the United States-Canada border by Canadian residents. This travel responds to international relative price movements and border conditions and is important to study as it can have significant effects on local economies. We first develop a theoretical model of cross-border travel based on the migration model examined in Anderson (2011) and derive an equilibrium system of structural gravity equations for travel flows. We then estimate this gravity system using monthly data from 1990 to 2012 on cross-border travel by Canadian residents. This data includes a traveler’s census division of residence (the source), the border post they cross, and the state to which they travel (the destination). We estimate that a 10% increase in distance between a source and a destination decreases the number of Canadian travelers by 16%-20%. Furthermore, border disruptions following the terrorist attacks in the U.S. in September 2001 decreased Canadians’ short-term crossborder travel by nearly 55% according to our estimates. We also estimate that a 10% appreciation of the Canadian dollar increased this travel by around 19% prior to those border disruptions but increased cross-border travel by only 3% after 2001. Importantly, our structural gravity approach allows us to estimate source-specific and destination-specific multilateral resistance terms which provides a novel method for quantifying variation in exposure to cross-border shopping across Canadian and U.S. communities.