No abstract

This research examines the impacts of changes in exchange rates on trade and capital flows between Canada and the United States of America. We seek to study the presence and degree of influence of several variables on exchange rates. Highlighting the degree of financial linkage between the two nations, we also test the relevance of the Covered Interest Rate Arbitrage Parity condition. The Appendix of this research paper contains information on NAFTA, Global Financial Crisis, and analysis of Neo-Fisherism. Furthermore, a few regressions, if needed for explanation purposes are mentioned in the appendix. Due to word limitations, an element of our research testing Neo-Fisherism) which we did in the course of this Paper is also mentioned in the appendix.