Discussion paper

DP1030 On the Optimality of Consumption Across Canadian Provinces

This paper tests for the optimality of consumption across Canadian provinces. The results indicate that consumption is highly integrated within the central and eastern core of the country, based around Ontario and Quebec. This is not true for provinces in the western half of the country, however, or for the most easterly province, Newfoundland. All of the provinces which fail the test for optimality are subject to large regional income disturbances. It is concluded that large enough disturbances can limit financial intermediation even when capital markets are highly integrated, as they are in Canada.

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Citation

Bayoumi, T (1994), ‘DP1030 On the Optimality of Consumption Across Canadian Provinces‘, CEPR Discussion Paper No. 1030. CEPR Press, Paris & London. https://cepr.org/publications/dp1030