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Railroads of the Raj: Estimating the Impact of Transportation Infrastructure

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  • Dave Donaldson
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    Abstract

    How large are the benefits of transportation infrastructure projects, and what explains these benefits? To shed new light on these questions, this paper uses archival data from colonial India to investigate the impact of India's vast railroad network. Guided by four predictions 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 (an effect that is purely due to newly exploited gains from trade) accounts for virtually all of the observed reduced-form impact of railroads on real income in the data. I find no spurious effects from over 40,000 km of lines that were approved but - for four different reasons - were never built.

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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16487.

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    Date of creation: Oct 2010
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    Handle: RePEc:nbr:nberwo:16487

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    1. “Railroads of the Raj: Estimating the Impact of Transportation Infrastructure,” D. Donaldson (2013)
      by afinetheorem in A Fine Theorem on 2013-05-05 05:59:13
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    2. Massimiliano Calì & Sami H. Miaari, 2012. "The labour market impact of mobility restrictions: Evidence from the West Bank," HiCN Working Papers 130, Households in Conflict Network.
    3. Kazuko Kano & Takashi Kano & Kazutaka Takechi, 2012. "Nonparametric Identification and Estimation of the Number of Components in Multivariate Mixtures," Global COE Hi-Stat Discussion Paper Series gd12-246, Institute of Economic Research, Hitotsubashi University.
    4. Paulo Bastos & Odd Rune Straume & Jaime A. Urrego, 2012. "Rain, food and tariffs," NIPE Working Papers 06/2012, NIPE - Universidade do Minho.
    5. Kano, Kazuko & Kano, Takashi & Takechi, Kazutaka, 2013. "The Price of Distance: Producer Heterogeneity, Pricing to Market, and Geographic Barriers," Discussion Papers 2013-03, Graduate School of Economics, Hitotsubashi University.
    6. Kurosaki, Takashi, 2012. "Urban Transportation Infrastructure and Poverty Reduction: Delhi Metro's Impact on the Cycle Rickshaw Rental Market," PRIMCED Discussion Paper Series 24, Institute of Economic Research, Hitotsubashi University.
    7. Abhijit Banerjee & Esther Duflo & Nancy Qian, 2012. "On the Road: Access to Transportation Infrastructure and Economic Growth in China," NBER Working Papers 17897, National Bureau of Economic Research, Inc.
    8. Jesse M. Cunha & Giacomo De Giorgi & Seema Jayachandran, 2011. "The Price Effects of Cash Versus In-Kind Transfers," NBER Working Papers 17456, National Bureau of Economic Research, Inc.
    9. Jonathan Vogel & Javier Cravino & Ariel Burstein, 2011. "Importing Skill-Biased Technology," 2011 Meeting Papers 440, Society for Economic Dynamics.
    10. Michael Peters, 2011. "Heterogeneous Mark-Ups and Endogenous Misallocation," 2011 Meeting Papers 78, Society for Economic Dynamics.
    11. Straub, Stéphane & Terada-Hagiwara, Akiko, 2011. "Infrastructure and Growth in Developing Asia," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
    12. Trevor Tombe, 2012. "The Missing Food Problem," Working Papers tt0060, Wilfrid Laurier University, Department of Economics, revised 2012.
    13. Demian Calin-Vlad, 2013. "Eu enlargement and the gains from trade," FIW Working Paper series 108, FIW.

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