Martin Simmler, Thünen Institute for Rural Economics

We leverage the expansion of the German truck toll network in July 2018 to predict transportation cost changes on the local level, and study their effect on consumer prices, truck traffic flows, employment and firm entry. We find that a 10% increase in simulated goods transportation costs decreases truck traffic flows by 10%, increases consumer prices by 2% and decreases employment on average by 5% and firm entry by 15%. While material intensive firms are strongly affected, others are largely unaffected. In addition, we show that a substantial part of the estimated overall reduction in local economic activity is due to the relocation of activity between regions.

with Damiaan Persyn (Thuenen Institute).