@article{Canadian-U.S.:4236,
      recid = {4236},
      author = {Alexander, William E.},
      title = {An Econometric Model of Canadian-U.S. Trade in Automotive  Products 1965-1971},
      publisher = {Bank of Canada},
      address = {1974},
      pages = {1 online resource (60 pages)},
      abstract = {In this paper I describe the construction and estimation  of a simple model of Canadian-U.S. trade in automotive  products during a period of the implementation of the  historic Automotive Agreement (1965-1971). Two conditions  of the Agreement - that the privilege of duty-free  importation of parts and vehicles into Canada is restricted  to bona fide manufacturers, and that these manufacturers  accept a commitment to increase Canadian value added in  production at a rate governed by the rate of growth of  North American vehicle sales in the Canadian market - are  viewed in the model as a means of providing an implicit  subsidy to Canadian automotive producers. Given duty-free  trade in automotive products over the Canadian border, one  could say that, in principle, multinational corporations  are maximizing profit subject to the side conditions  imposed by the agreement. The implication is that exports  and imports are simultaneously determined. Unfortunately,  however, it was not possible to model the process in this  way. Instead exports are first determined, and then imports  are determined as a recursive function of exports. In this  way I recognize (but do not attempt to explain) the fact  that Canada has specialized in vehicle assembly under the  terms of the agreement and has become a net exporter of  assembled motor vehicles and a net importer of motor  vehicle parts. In my final analysis several variations on  two reduced-form equations have been estimated: ie,  Canadian (1961) constant- dollar exports and imports are  explained. The tentative conclusion reached is that the  subsidy-growth nexus implicit in the terms of the agreement  was a crucial determinant of the rapid rate of expansion  and rationalization of the Canadian automotive industry  during the period 1965-1971.},
      url = {http://www.oar-rao.bank-banque-canada.ca/record/4236},
      doi = {https://doi.org/10.34989/tr-3},
}