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Railroads of the Raj: Estimating the Impact of Transportation Infrastructure

Dave Donaldson

No 16487, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: F15 N15 N75 O1 R13 R4 (search for similar items in EconPapers)
Date: 2010-10
New Economics Papers: this item is included in nep-net and nep-ure
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Citations: View citations in EconPapers (161)

Published as “Railroads of the Raj: Estimating the Impact of Transportation Infrastructure”, American Economic Review, Vol. 108, NO. 4-5, April 2018 (pp. 899-934)

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