Okay, please forgive my ignorance of economics. I had a really lousy econ teacher in high school which turned me off of ever wanting to study it again.
I’m considering going to grad school in Canada, and people have asked me about the tuition, as I would be an international student. I’ve compared costs, and find that it would be comparable to being an out-of-state student in the U.S. (and MUCH MUCH less than a private school in the U.S.). Anyway, I explain this, and invariably, people ask, “Oh, is that because of the exhange rate?” Apparently, the exchange rate is really great right now, and I have NO idea what that means. If $.60 US = $1.00 CN, how can that be especially wonderful? That’s why stuff in Canada has a higher price. Doesn’t it all equal out, as long as the currency is stable?
~Kyla
“You couldn’t fool your mother on the foolingest day of your life if you had an electrified fooling machine.”
I think the short answer would be yes, except that its not stable. Exchange rates vary constantly, usually slowly and slightly but sometimes rapidly - and reflect (supposedly) changes in GNP and government stability. Another way to look at it though, is that your dollar goes farther in Canada just like your dollar goes farther in Nebraska (as opposed to New York or L.A.)Surrounding economic conditions really have far more to do with it than exchange rates (although exchange rates do in a way reflect a national economic condition…)
Actually, I think that currently the exchange rate is barely able to keep Canada from being prohibitively expensive for a lot of Yanks. When the Canadian dollar first started falling against the U.S. dollar around 1980, the cost of living between the two countries was comparable. Driving into Windsor from Detroit or Niagara Falls from Niagara Falls, you could find gasoline or a McDonalds hamburger posted at almost the same price, but with a U.S. dollar worth $1.27 Canadian, it was a bit cheaper to buy the same product.
In the last 20 years, costs in Canada have gone a lot higher for some products and the exchange rate simply brings the adjusted price closer to what a holder of U.S. dollars would expect, anyway. It depends a lot on the product. A mass market book selling for $5.99 in the U.S. is listed as $6.99 in Canada. If the exchange rate is more than 17%, that book will be cheaper for a Yank to buy in Canada. On the other hand, if a $2,000 U.S. computer costs $3,000 in Canada, a 17% exchange rate is not going to help much at all. (I don’t know the current rates or computer prices. Those were examples I threw out based on my last trip North where I encountered several people claiming that anything with a transistor or a chip cost six times as much in Canada–which I was sure was an exaggeration.)
Tom, a Canadian friend told me that the government subsidizes books, so they’re cheaper there.
BTW, I live in Northern California, which means that just about ANYWHERE would be cheaper to live. I’m a college student, and people are jealous of my housing situation - a TINY room in a condo very close to campus for $350 a month. I know people who live 40 minutes from school and pay $500, $600 a month for one stupid room. So…it’s a safe guess that pretty much anywhere I move to (with the exception of New York) will be cheaper to live in.
~Kyla
“You couldn’t fool your mother on the foolingest day of your life if you had an electrified fooling machine.”
On a trip to Whistler, BC, two weeks ago, I found the prices to be quite low (compared to So. Cal.), and this was in a trendy, isolated resort where you’d expect prices to be adjusted to take advantage of the tourists.
I think Cooper’s “stability” explaination is on the mark. As long as the fluctuation is recent and hasn’t reached a point of stability, bargans can be found. My 1998 trip to Britain with American dollars proves that the opposite is often true as well.