To analyze the mutually dependent relationship between local economic performance and the demand for and supply of transport services, we employ the structural panel VAR method that is popular in the macroeconomic literature, but which has not previously been applied to the modeling of within-city dynamics of transportation. We focus on a within-city panel of Berlin, Germany, during the heyday of the construction of its dense public transit network (1880?1914). Our results suggest that economic outcomes and supply of transport infrastructure mutually determine each other. Both transport demand and supply seem to be driven more by firms than by residents.

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25 March 2014     Paper Number SERCDP0158

Download PDF - Chicken or Egg? The PVAR Econometrics of Transportation

This SERC/Urban and Spatial Programme Discussion Paper is published under the centre's Urban programme.