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I think you misunderstand the comment about exchange rate. In Canada, the price difference of goods with the U.S. is beyond just the exchange rate. Thus, you ca

I think you misunderstand the comment about exchange rate. In Canada, the price difference of goods with the U.S. is beyond just the exchange rate. Thus, you can convert a salary between USD and CAD, but that doesn't account for higher prices of goods in Canada (beyond exchange rate differences). This is why many Canadians shop in the U.S. (if feasible), or travel to the U.S. to make big purchases (such as cars). When CAD gets stronger, w.r.t. USD, prices in Canada don't respond proportionately. Likewise, when CAD gets weaker, prices in Canada tend to respond quite rapidly. It seems asymmetric, and is another factor when comparing US/Canada cost of living. I'd love for an economist to explain this. It's never really made sense to me, but anecdotally, it's well known phenomenon in Canada.

grotsnot 9y ago
IANAE but it sounds like when imports get cheaper, importers pocket as much of the the difference for as long as they can get away with it. When imports get more expensive, they pass on as much as they can to consumers as quickly as they can get away with it. Not terribly surprising for profit-driven behavior.
- gricardo99 9y ago
  That sounds about right. Also, there's some cost to readjusting prices, so that probably introduces some price change hysteresis.
FT_intern 9y ago
The sales tax in canada is brutal
- kogepathic 9y ago
  Not really. The highest sales tax is 15% (NB, NL, NS, PEI). I'll grant that's higher than in some US states, but come over to Europe where VAT is usually 19-25%. Although at least in Europe prices are advertised including VAT, so no mental math is required to calculate how much it will end up costing.
  - Amezarak 9y ago
    That's higher than in all US states. The highest US state sales tax is 7.25%. The highest municipal+state sales tax is 12.8%. That's a huge outlier, though. The average is 5%, and many states exempt huge swaths of goods (such as groceries) and some have no sales tax at all.
    - kogepathic 9y ago
      > and many states exempt huge swaths of goods (such as groceries) and some have no sales tax at all. Groceries are exempt from GST/PST or HST in Canada as well.
- gricardo99 9y ago
  That certainly changes the cost-of-living, but it's not really relevant to the point about exchange rates and price differences, since most people compare prices pre-sales tax. Sticker prices, in the US and Canada (and Europe?), don't typically include sales tax.

grotsnot 9y ago

IANAE but it sounds like when imports get cheaper, importers pocket as much of the the difference for as long as they can get away with it. When imports get more expensive, they pass on as much as they can to consumers as quickly as they can get away with it. Not terribly surprising for profit-driven behavior.

gricardo99 9y ago
That sounds about right. Also, there's some cost to readjusting prices, so that probably introduces some price change hysteresis.

FT_intern 9y ago

The sales tax in canada is brutal

kogepathic 9y ago
Not really. The highest sales tax is 15% (NB, NL, NS, PEI). I'll grant that's higher than in some US states, but come over to Europe where VAT is usually 19-25%. Although at least in Europe prices are advertised including VAT, so no mental math is required to calculate how much it will end up costing.
- Amezarak 9y ago
  That's higher than in all US states. The highest US state sales tax is 7.25%. The highest municipal+state sales tax is 12.8%. That's a huge outlier, though. The average is 5%, and many states exempt huge swaths of goods (such as groceries) and some have no sales tax at all.
  - kogepathic 9y ago
    > and many states exempt huge swaths of goods (such as groceries) and some have no sales tax at all. Groceries are exempt from GST/PST or HST in Canada as well.
gricardo99 9y ago
That certainly changes the cost-of-living, but it's not really relevant to the point about exchange rates and price differences, since most people compare prices pre-sales tax. Sticker prices, in the US and Canada (and Europe?), don't typically include sales tax.