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American Economic Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Railroads of the Raj: Estimating the Impact of Transportation Infrastructure

  • Dave Donaldson
American Economic Review
vol. 108, no. 4-5, April 2018
(pp. 899–934)
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Abstract

How large are the benefits of transportation infrastructure projects, and what explains these benefits? This paper uses archival data from colonial India to investigate the impact of India's vast railroad network. Guided by four results 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 accounts well for the observed reduced-form impact of railroads on real income in the data.

Citation

Donaldson, Dave. 2018. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure." American Economic Review, 108 (4-5): 899–934. DOI: 10.1257/aer.20101199

Additional Materials

JEL Classification

  • H54 National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock
  • L92 Railroads and Other Surface Transportation
  • N75 Economic History: Transport, Trade, Energy, Technology, and Other Services: Asia including Middle East
  • O22 Project Analysis
  • R12 Size and Spatial Distributions of Regional Economic Activity
  • R42 Transportation Economics: Government and Private Investment Analysis; Road Maintenance, Transportation Planning