Maria Persson
Associate professor, Programme director – Master of Economics
Building Bridges: The Effect of Major Infrastructure Development on Trade
Author
Summary, in English
We provide evidence of a positive effect of major infrastructure development on international trade, using the opening of the fixed link between Denmark and Sweden in 2000 (The Oresund Bridge) as a quasi-natural experiment. Our Synthetic Control Method (SCM) constructs a counterfactual Danish-Swedish trade relationship, which represents bilateral trade in the absence of the bridge. Evaluating actual trade against its synthetic counterpart for the period 2001-2008 shows that Danish-Swedish trade was 24.6% larger than it would have been in the absence of the bridge using our preferred specification. The result is robust to standard sensitivity checks. We supplement our analysis with a standard Difference-in-differences (DiD) estimator, which uses fixed effects. The DiD estimator yields a slightly larger trade effect of 26.7%, and is robust to a number of sensitivity analyses, including estimation at the product level. Both our SCM and DiD point to the trade-boosting effects being gradual.
Department/s
- Department of Economics
- Department of Economic History
- Centre for Economic Demography
Publishing year
2022
Language
English
Publication/Series
Working Papers
Issue
2022:3
Full text
Document type
Working paper
Topic
- Economics
Keywords
- Fixed link
- bridge
- tunnel
- transport infrastructure
- trade
- Synthetic Control Method
- Difference-in-differences
- F14
- F15
Status
Published