Trade From Space: Shipping Networks and The Global Implications of Local Shocks

Authors

• Heiland
• I.
• Moxnes
• A.
• Ulltveit-Moe
• K.H.
• Zi
• Y.

Publication Date

DOI

10.1162/rest.a.267

JEL Classification

Key Words

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This paper analyzes international externalities of a local shock to the global shipping network. The 2016 Panama Canal expansion removed a bottleneck in seaborne transportation. Using reduced-form and structural methods in combination with novel satellite data on ships, we find that trade increased significantly among country-pairs using the canal. We find that the global real income gains from the canal expansion were over three times greater than the income gains for Panama itself. A link removal analysis reveals that most shipping links are associated with positive and quantitatively important positive international externalities.

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