Date: Mar.7, 2022

Time: 15:00-16:30

Speaker: Prof. SONG Zheng, Michael

Venue: Tencent Meeting (945-628-403) 

[Speaker Intro]

Prof. Song is a professor at the Department of Economics, Chinese University of Hong Kong (CUHK), an outstanding fellow of the Faculty of Social Science at CUHK and a co-director of CUHK-Tsinghua Joint Research Center for Chinese Economy. He is also a senior fellow of ABFER and a fellow of Luohan Academy. His research focuses on Chinese economy and macroeconomics. His papers were published by leading academic journals including American Economic Review, Econometrica and Journal of Political Economy. His paper “Growing like China” won Sunyefang Economic Science Award. Before joining CUHK, Prof. Song was an associate professor of economics at Chicago Booth. Prof. Song is also a co-editor of China Economic Review, an associate editor of Econometrica, and sits on a number of academic advisory boards such as China’s Economics Foundation and Hong Kong Institute for Monetary and Financial Research. 

【Abstract】

We estimate the returns to infrastructure investments for each city-to-city link in China’s road network.Using real-time GPS data from over half a million trucks, we first identify congested and uncongested links based on whether speed decreases with traffic densitv,We then estimate the elasticitv of traffic flows to the capacity of a link conditional on its congestion status. We incorporate congestion heterogeneity into a trade model with optimal route choices developed by Allen and Arkolakis (2019). Our structural estimation shows that the model can replicate the main features of traffic flow, speed and congestion in the data. The benefit of expanding the capacity of a link is inferred from the estimated model. The cost of the expansion is estimated from construction costs based on physical topography and market value of acquired land. We find that about64% of China’s intercity links are uncongested and associated with negative returns. The returns are much higher for congested links and the dispersion is generally large. While we focus on marginal local improvements in individual link capacity and do not quantify aggregate misallocation of the entire network, the large dispersion in returns across links suggests there could be misallocation of road infrastructure investment in China. To facilitate comparison, we also analyze real-time traffic flow data for highways in England. In sharp contrast to China, almost all intercity links in England are found to be congested.