China’s new silk road and China-EU trade
Journal
Annals of Economics and Finance
Journal Volume
19
Journal Issue
2
Pages
683-701
Date Issued
2018
Author(s)
Abstract
This paper develops a simple model, wherein firms choose to pay a premium for timely delivered freight since consumers place more value on goods that arrive sooner than later, to estimate the impact of China’s “New Silk Road” (NSR) initiative on trade between China and Europe. We argue that if China’s NSR is sufficiently realized, many time-sensitive firms that currently use maritime transport might switch to ground transport as the latter shortens transit time sharply at reasonable costs, hereby enlarging the market demands. Consequently, NSR might, ceteris paribus, increase trade between China and Europe by an additional 8% to 32%. ? 2018, Central University of Finance and Economics. All rights reserved.
Type
journal article