Common Transport Infrastructure: A Quantitative Model and Estimates from the Belt and Road Initiative

François de Soyres, Alen Mulabdic and Michele Ruta

No 1273, International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper presents a structural general equilibrium model to analyze the effects on trade, welfare, and gross domestic product of common transport infrastructure. The model builds on Caliendo and Parro (2015) to allow for changes in trade costs due to improvements in transportation infrastructure, financed through domestic taxation, connecting multiple countries. The model highlights the trade impact of infrastructure investments through cross-border input-output linkages. This framework is then used to quantify the impact of the Belt and Road Initiative. Using new estimates on the effects on trade costs of transport infrastructure related to the initiative, the model shows that gross domestic product will increase by up to 3.4 percent for participating countries and by up to 2.9 percent for the world. Because trade gains are not commensurate with projected investments, some countries may experience a negative welfare effect due to the high cost of the infrastructure.

Keywords: Transportation infrastructure; Trade; Structural general equilibrium; Belt and road (search for similar items in EconPapers)
JEL-codes: F10 F11 F14 (search for similar items in EconPapers)
Pages: 50
Date: 2020-02-26
New Economics Papers: this item is included in nep-int and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (56)

Downloads: (external link)
https://www.federalreserve.gov/econres/ifdp/files/ifdp1273.pdf (application/pdf)

Related works:
Journal Article: Common transport infrastructure: A quantitative model and estimates from the Belt and Road Initiative (2020)
Working Paper: Common Transport Infrastructure: A Quantitative Model and Estimates from the Belt and Road Initiative (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgif:1273

DOI: 10.17016/IFDP.2020.1273

Access Statistics for this paper

More papers in International Finance Discussion Papers from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().