Osaka Workshop on Economics of Institutions and Organization (#163)

Date: Friday, October 18, 2024 13:30 to 15:00
Place: Conference Room, 6th floor, OSIPP Building, Toyonaka Campus, Osaka University　　　　
Registration: E-mail to Ms. Kitabayashi 【yuri-kitabayashi(a)iss.u-tokyo.ac.jp 】
　　　　　　 (The reply may be sent on the day of the event.)

Presenter:
Hirokazu Ishise
(Osaka School of International Public Policy, Osaka University)

Title: “Gauge Size of the Border: the Effect of Railroad Connection on International Trade“

I study the contribution of rail connections to international trade using a gravity regression. To deal with the potential endogeneity problem of the cross-border rail connections, I use an instrument; whether a pair of neighboring countries use the same rail gauges. The rail gauge is historically determined. One factor is the construction costs determined by the geographic conditions. Another factor is the former political boundaries when railroads were constructed. Even after controlling for these observable characteristics, whether a pair of countries use the same gauge strongly predicts the cross-border rail connection. Having some rail connections would increase trade value by about 2.7 times larger. The coefficient without dealing with the endogeneity problem is approximately the same or slightly smaller than the coefficient estimated with the instrument depending on the specifications.

Abstract: Hirokazu Ishise