Donaubauer, Julian Glas, Alexander Nunnenkamp, Peter
Year of Publication:
Kiel Working Paper No. 2016
Making use of considerably improved measures of infrastructure, we assess the impact of infrastructure on bilateral trade for a panel of 37 developed and emerging economies during the period 1995-2011. We find significant and non-linear effects of overall infrastructure and infrastructure in transportation, communication, energy, and finance on trade in consumption goods, capital goods, and intermediates. Our major findings prove to be robust to various modifications and extensions of the gravity model. Importantly, we still observe significant and non-linear effects of infrastructure on bilateral trade after accounting for potential reverse causality.