Federal Reserve Seminar: How Far Is Seattle from Vancouver?

Yuriy Gorodnichenko and Linda Tesar (2006), "Border Effect or Country Effect?: Seattle Is 110 Miles From Vancouver After All" (Ann Arbor: University of Michigan) http://www-personal.umich.edu/~ygorodni/Gorodnichenko-Tesar-Border.pdf:

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 if there is cross-country heterogeneity in the distribution of within-country price differentials, there is no clear benchmark from which to gauge the effect of a border. In the absence of a structural model it is impossible to separate the “border” effect from the effect of trading with a country with a different distribution of prices. We show that the border effect identified by Engel and Rogers (1996) is entirely driven by the difference in the distribution of prices within the US and Canada.

Comments

[Fred]

To clarify: Vancouver, British Columbia is a Canadian city to the north of Seattle. Vancouver, Washington is an American city 134 miles to the south of Seattle, that is really a suburb of Portland, Oregon, being just across the Colombia River.

There is an interesting price story there too, as Washington has a sales tax but Oregon does not.

[John]

I drive up I-5 to Canada several times a year, from Northeast Seattle, and I can say that the customs station is 115 miles (+/- only a few miles) from the north boundary of Seattle city limits (which I think is 175th St). I know because I make a game of setting my odometer each time.

From customs to Vancouver city limits is another 25ish (that's miles, not Km), for a total of about 140. I don't normally go to Vancouver, so that estimate is a little shaky.

It may be 110 as the crow flies, but that seems low. Maybe a google check would help.