Essays on Trade and Transportation
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This dissertation considers the interconnections between trade and transportation. Through various theoretical and empirical analyses, I provide novel evidence of the simultaneity of trade and transportation, of spillover effects across integrated transport markets, and of the influence of the international transport sector on trade policy effectiveness and natural disaster induced trade disruptions. In the first substantive chapter, I develop a model of international trade and transportation. Accounting for the joint-production present in the international container shipping industry, I illustrate that freight rates adjust to differences in the international demands for transport and can result in balanced or imbalanced equilibrium trade in the presence of asymmetric freight rates. The empirical results exhibit the simultaneity of international trade and transportation costs and show that the dependence of transport costs on the trade imbalance can lead to spillover effects across bilateral export and import markets. In the second substantive chapter, I investigate the effects of maritime trade policy on bilateral trade in the presence of trade imbalances. Using the previously developed model, I show that the trade elasticities with respect to carrier costs vary systematically across transport markets, bilateral trade imbalances and differentiated products. Empirically, I estimate the varying effects of an EU environmental policy on U.S.-EU trade and provide strong evidence in support of the theoretical results. In the third substantive chapter, I analyze the dynamics and spatial distribution of the trade effects induced by natural disasters. I develop a spatial gravity model of international trade and apply the model to monthly US port level trade data. Empirically, I estimate the dynamic evolution of trade effects caused by Hurricane Katrina differentiating trade disruptions at the local port level. The estimates point to the static and dynamic resilience of international trade. While ports closest to Katrina's epicenter experience significant short-run reductions that can be of permanent nature, international trade handled by nearby ports rises in response to this disaster, both in the short- and in the long-run. Overall, the analysis underlines the significance of local infrastructure networks to reduce the devastation inflicted by natural disasters. This dissertation includes previously unpublished co-authored material.