Bengt Söderlund, 04 November 2020

Strict travel restrictions are preventing business partners from different countries from meeting in person. This column explores the effect of business travelling time on trade using data from the liberalisation of Soviet air space in 1985, which radically reduced flight times between Europe and East Asia. The findings reveal that travelling time can account for most of the trade frictions that cause bilateral trade to sharply decline with geographical distance, suggesting that the current travel restrictions could have large negative effects on trade.

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