Beschreibung:
We exploit exogenous shocks to flight distances over time to identify the role of transportation costs on air exports. Distance has similar-sized effects on air freight in panel regressions, where it is an unconfounded proxy for transport costs, as in cross-sectional analysis, where it captures a broader set of trade frictions. We assess the effect of fuel efficiency improvements on trade in a sample of 242 country pairs that account for one-sixth of EU-extra-EU trade. About 40% of the growth in air freight over the sample period can be attributed to fuel efficiency gains. Additionally, we find that a counterfactual modernization of airline fleets would raise air exports by 28%