Do High Speed Railways Lead to Urban Economic Growth in China?: A Panel Data Study of China's Cities

43 Pages Posted: 5 Jan 2017

See all articles by Jack Strauss

Jack Strauss

University of Denver - Reiman School of Finance; University of Denver

Hongchang Li

Beijing Jiaotong University

Shunxiang Hu

Beijing Jiaotong University

Lihong Liu

Beijing Jiaotong University

Date Written: January 2, 2017

Abstract

This paper investigates the impact of high-speed railroads (HSR) on city-level economic activity using a new dataset for approximately 200 cities in China from 2007-2014. We apply panel Granger causality methods to assess whether increases in a city’s accessibility increases GDP growth, GDP per capita growth and wage growth. Or does causality run the opposite way – does rising economic growth boost accessibility? Results document that increases in accessibility lead to significant and relatively large increases in GDP growth on the city-level; further, the benefits substantially out-weigh HSR’s fixed costs, depreciation and subsidies. Out-of-sample methods document the importance of increases in HSR in forecasting GDP growth. Monte Carlo simulations document the usefulness of OLS and out-of-sample tests in assessing panel Granger Causality tests.

Keywords: China Infrastructure, Granger Causality, High Speed Railroads

JEL Classification: O18, L92, O2

Suggested Citation

Strauss, Jack and Li, Hongchang and Hu, Shunxiang and Liu, Lihong, Do High Speed Railways Lead to Urban Economic Growth in China?: A Panel Data Study of China's Cities (January 2, 2017). Available at SSRN: https://ssrn.com/abstract=2892833 or http://dx.doi.org/10.2139/ssrn.2892833

Jack Strauss (Contact Author)

University of Denver - Reiman School of Finance ( email )

2101 S. University Blvd
Denver, CO COLORADO 80126
United States
314 602 7265 (Phone)

University of Denver ( email )

2201 S. Gaylord St
Denver, CO 80208-2685
United States

Hongchang Li

Beijing Jiaotong University ( email )

No.3 of Shangyuan Residence Haidian District
Beijing, 100089
China

Shunxiang Hu

Beijing Jiaotong University ( email )

No.3 of Shangyuan Residence Haidian District
Beijing, 100089
China

Lihong Liu

Beijing Jiaotong University ( email )

No.3 of Shangyuan Residence Haidian District
Beijing, 100089
China

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