Date: Mar.17, 2022

Time: 15:00-16:30

Speaker: Dr Zheng Wang

Venue: Tencent Meeting (ID: 869-882-739)

[Speaker Intro]

Dr Zheng Wang is an Associate Professor of Economics at De Montfort University (UK). His research interests include international trade, political economics, environmental economics, and economic and social policy evaluation. His research results have been published in Journal of Development Economics, European Economic Review, Journal of Comparative Economics, Environmental and Resource Economics, Economics Letters, Review of World Economics, etc.

【Abstract】

Using a unique itinerary-level global air traffic database, this paper proposes a novel instrumental variable to estimate the effect of in-person interactions on bilateral trade, where the former is measured by international air passenger flows. Our identification strategy exploits variations in third-country connecting flight capacities in the global flight route network to leverage exogenous variations in the air connectivity between two countries. Our results show that international air connectivity facilitates trade between countries, but only for industries with a higher reliance on relationship-specific investments or incomplete contracts. We also find that trade in new products, relative to existing products, responds more positively to improved air transport links. Together, these findings suggest that in-person communications reduce transaction costs in international trade by facilitating the exchange of complex knowledge that cannot be easily and completely codified and by breaking market entry barriers.