American Economic Review· 2018Q1
Railroads of the Raj: Estimating the Impact of Transportation Infrastructure
- 1,582citations
- Q1SCImago
- 2018year
Short summary
Railroads in colonial India significantly reduced trade costs, increased trade volume, and boosted real income levels, with a model-based statistic accurately predicting these welfare gains.
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Key points
- Railroads decreased interregional price gaps and trade costs.
- Railroad expansion led to increased interregional and international trade.
- Real income levels rose due to railroad development.
- A model-derived welfare statistic accurately predicted the observed impact on real income.
AI-generated from the title and abstract; the full text is not read.
Abstract
How large are the benefits of transportation infrastructure projects, and what explains these benefits? This paper uses archival data from colonial India to investigate the impact of India's vast railroad network. Guided by four results from a general equilibrium trade model, I find that railroads: (1) decreased trade costs and interregional price gaps; (2) increased interregional and international trade; (3) increased real income levels; and (4) that a sufficient statistic for the effect of railroads on welfare in the model accounts well for the observed reduced-form impact of railroads on real income in the data. (JEL H54, L92, N75, O22, R12, R42)
The authors' abstract, as published at the source. American Economic Review, 2018 · DOI ↗
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Field: General Economics, Econometrics and Finance
General Economics, Econometrics and FinanceEconomics, Econometrics and Finance