Interesting Graph

Here is an interesting graph from Stephen Gordon's web site Worthwhile Canadian Initiative:

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This is an interesting relationship that I wouldn't have considered, but it does make sense. Gordon claims that the trips are a function of the exchange rate. That clearly would affect plans for vacations, but would it be definitive. And how many trips are business trips which are likely indifferent to the exchange rate? While I can see a relationship, I think it is weak. So I would consider this more an example of correlation than causation.

I'm not an economist, but I would think a causal link would be weak. Sure, if the Canadian dollar gets too expensive, some trips may be cancelled or postponed. Similarly, if the Canadian dollar is cheap, some might be lured into taking a trip that otherwise wouldn't have considered it. But I don't see the relationship as strong and there are blips on the graph that show the two are not tightly coupled. So, is there something else going on? Perhaps strong economic growth in the US leaves more money in pockets, so more trips are planned. At the same time US demand for Canadian products goes up, so the value of the Canadian dollar rises.

I see a sharp drop in trips in 2001. This is during a recession in the US. The Canadian dollar lingers a while at a high value, then comes down. But maybe it comes down because the recession and "jobless recovery" means that there is less pocket change for American workers, so they plan less trips to Canada. Maybe the number of trips keeps falling because the recovery is weak in the US and because of 9/11 security imposes more and more burdens on travel. The Canadian dollar strengthens post 9/11, but does that really cause less trips by US citizens?

I don't buy the argument that there is a strong link. This think this is more of a historical coincidence. Again, I'm not an economist, but I have a hard time buying the claim from this graph. I would need more data. I guess I'm stubborn. Just because an economist makes a claim, I don't necesarily buy it. I need more convincing.