Building Bridges: The Effect of Major Infrastructure Development on Trade
(2022) In Working Papers- Abstract
- 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... (More)
- 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. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/7c870128-5617-47a7-b897-091d12653879
- author
- Persson, Maria LU ; Soegaard, Christian and Welander Tärneberg, Anna LU
- organization
- publishing date
- 2022
- type
- Working paper/Preprint
- publication status
- published
- subject
- keywords
- Fixed link, bridge, tunnel, transport infrastructure, trade, Synthetic Control Method, Difference-in-differences, F14, F15
- in
- Working Papers
- issue
- 2022:3
- pages
- 50 pages
- language
- English
- LU publication?
- yes
- id
- 7c870128-5617-47a7-b897-091d12653879
- date added to LUP
- 2022-02-25 15:29:20
- date last changed
- 2024-03-11 15:12:13
@misc{7c870128-5617-47a7-b897-091d12653879, abstract = {{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.}}, author = {{Persson, Maria and Soegaard, Christian and Welander Tärneberg, Anna}}, keywords = {{Fixed link; bridge; tunnel; transport infrastructure; trade; Synthetic Control Method; Difference-in-differences; F14; F15}}, language = {{eng}}, note = {{Working Paper}}, number = {{2022:3}}, series = {{Working Papers}}, title = {{Building Bridges: The Effect of Major Infrastructure Development on Trade}}, url = {{https://lup.lub.lu.se/search/files/173633779/WP22_3.pdf}}, year = {{2022}}, }