3. Methodology and data sources

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To develop estimates of CBS, data are integrated from a range of survey and administrative sources used by the CSMA. Data from several of these sources, such as the International Travel Survey (ITS), are released regularly by Statistics Canada. Other administrative data sources, such as the Register of Imported Vehicles (RIV), are routinely used within the CSMA for estimation, data coherence and quality assurance purposes. The final estimates of CBS are calculated by aggregating the spending on goods purchased in the United States and brought back to Canada, while on same-day and overnight trips, and with data on postal and courier imports and motor vehicles imports.

Cross-border shopping = same-day spending + overnight spending + postal and courier imports + motor vehicle imports

The data used in this analysis originates from several sources. Data from the International Travel Survey: Mail-back Questionnaires and Air Exit Survey are used extensively. The ITS covers Canadian residents returning to Canada and American and overseas residents entering Canada, as well as travellers returning directly to selected countries. This analysis uses the spending estimates from the ITS of Canadian residents on trips of one or more nights to the United States along with the spending estimates for same-day trips to the United States. Customs data, adjusted with Canada Post data on the volume of parcels entering Canada, are used to estimate values for goods delivered from abroad to Canada by post and courier. Data derived mainly from the RIV are used to estimate the value of vehicles brought into Canada from the United States by Canadian households. In addition, data from Revenue Canada's Casual goods accounting document - B15, are used to validate some of these import data. Retail trade sales data from the Monthly Retail Trade Survey are compared to the final estimates of CBS to measure the relative size of the cross-border expenditures in relation to retail spending in Canada.Note 1

As not all of the expenditures incurred in the United States are and can be transported across borders, this analysis uses a range of statistical assumptions concerning the extent to which these expenditures are on goods consumed in Canada, in order to estimate the value of CBS. The estimates are based on three different scenarios (low, medium and high expenditures), with each scenario being based on different assumptions, that reflect the professional judgement of the subject matter experts and build on previous internal analysis conducted within the CSMA on the value of cross-border expenditures. Statistical bounds are placed around these expenditure estimates using different threshold values and are validated with other data sources when possible. The low expenditure scenario represents the lower-bound estimates for CBS whereas the high expenditure scenario represents the upper-bound estimates for the value of CBS. The medium expenditure scenario is based on assumptions assumed to be the most plausible.

3.1 Overnight trips to the United States

The ITS collects information on spending abroad by Canadian residents travelling for business, pleasure and other reasons. For those travellers staying one or more nights in the United States, the total spending data is collected according to five types of spending categories:Note 2

  • AccommodationNote 3
  • Transportation – includes gasoline expenditures, car rentals, intercity plane, bus and train fares, local bus and taxi.
  • Food and beverage
  • Recreation and entertainmentNote 4
  • Other – includes expenses for souvenirs, shopping, photos, etc.Note 5

For the categories where no examples are listed, the respondent determines what to include, and estimates are based on the respondent’s interpretation. Table 1 reports the different ratios that are used to estimate the portion of U.S.-based expenditures on goods that are brought back to Canada from overnight trips.

Table 1
Ratios used to estimate the portion of goods that are brought back to Canada from overnight trips
Table summary
This table displays the results of Ratios used to estimate the portion of goods that are brought back to Canada from overnight trips. The information is grouped by Scenario (appearing as row headers), Overnight spending ratios, Accommodation, Transportation, Food and beverage, Recreation and entertainment and Other, calculated using percent units of measure (appearing as column headers).
Scenario Overnight spending ratios
Accommodation Transportation Food and beverage Recreation and entertainment Other
percent
Low expenditure scenario 0 10 5 10 60
Medium expenditure scenario 0 25 10 15 80
High expenditure scenario 2 30 15 20 100

Since the ITS includes spending by households as well as businesses, once the spending estimates are calculated, they are multiplied by a personal expenditure factor for Canadians travelling abroad. By doing so, it is ensured that only the portion that is assumed to be consumed by households (and not businesses) is included. The personal expenditure factor is estimated based on the ITS questions related to the main reason of the trip (business/pleasure/other) and what percentage of these expenditures was paid personally, by business or by government. It is the same factor used in the Canadian economic accounts to allocate part of the imports of travel services to the household final consumption expenditure.

3.2 Same-day trips to the United States

The ITS also collects data on Canadians taking same-day trips to the United States. A breakdown of spending by categories is not available. As with overnight trips, the analysis evaluates different assumptions concerning the share of U.S.-based expenditures that are brought back into Canada. These expenditure ratios are presented in Table 2.

Table 2
Ratios used to estimate of the portion of goods that are brought back to Canada from same-day trips (excluding vehicles)
Table summary
This table displays the results of Ratios used to estimate of the portion of goods that are brought back to Canada from same-day trips (excluding vehicles). The information is grouped by Scenario (appearing as row headers), Same-day spending ratios, calculated using percent units of measure (appearing as column headers).
Scenario Same-day spending ratios
percent
Low expenditure scenario 25
Medium expenditure scenario 50
High expenditure scenario 75

Given that the same-day data includes the purchase of motor vehicles, motor vehicle imports are excluded and treated as a separate component. As in the case of overnight spending, a personal expenditure factor is also applied to the same-day spending to obtain estimates for households.

3.3 Goods imported by post and courier

In addition to direct spending while travelling in the United States, goods imported into Canada from abroad by post and courier are also added to the estimates of CBS. An adjustment to the data collected is made to account for the duty-exempt and non-taxable postal imports that are not included in the original postal estimates. A personal expenditure ratio is applied, limiting the data to households, and three statistical assumptions are evaluated. Table 3 reports the ratios used. It is important to note that spending on goods purchased from abroad by post and courier also includes foreign (non-U.S.) imports.Note 6

Table 3
Ratios used to estimate personal expenditure on postal and courier imports
Table summary
This table displays the results of Ratios used to estimate personal expenditure on postal and courier imports. The information is grouped by Scenario (appearing as row headers), Postal imports, Courier imports and Postal imports adjustment, calculated using percent units of measure (appearing as column headers).
Scenario Postal imports Courier imports Postal imports adjustment
percent
Low expenditure scenario 50 20 90
Medium expenditure scenario 85 25 100
High expenditure scenario 90 50 100

3.4 Motor vehicles

The value of motor vehicles brought into Canada from the United States by households is obtained from the household final consumption expenditure estimates, in which the data is derived from the RIV and from data extracted from survey and administrative data sources. The RIV database tracks the number of vehicles individuals import into the country by model year, to which an average price is applied. In the most recent years, new vehicle imports are generally made up of more expensive vehicles, so a price above the average Canadian selling price (adjusted for price differentials and exchange rate) is used. For used motor vehicles, values are derived from using the average age and the approximate residual value. These estimates cover purchases of passenger vehicles, trucks, buses, multi-purpose vehicles (MPV), snowmobiles, motorcycles and trailers.Note 7 Since the value of motor vehicle imports is directly calculated, the estimates are the same for the low, medium and high expenditure scenarios.

3.5 Seasonal adjustment

Once the estimates have been calculated for overnight spending, same-day spending, postal and courier imports and motor vehicle imports for the low, medium and high expenditure scenarios, the quarterly data is subsequently seasonally adjusted using X-12-ARIMA.

Notes

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