This article examines the historical impact of railroads on the U.S. economy, with a focus on quantifying the aggregate impact on the agricultural sector in 1890. Expansion of the railroad network may have affected all counties directly or indirectly—an econometric challenge that arises in many empirical settings. However, the total impact on each county is captured by changes in that county’s “market access,” a reduced-form expression derived from general equilibrium trade theory. We measure counties’ market access by constructing a network database of railroads and waterways and calculating lowest-cost county-to-county freight routes. We estimate that county agricultural land values increased substantially with increases in county market access, as the railroad network expanded from 1870 to 1890. Removing all railroads in 1890 is estimated to decrease the total value of U.S. agricultural land by 60%, with limited potential for mitigating these losses through feasible extensions to the canal network or improvements to country roads.

The primary motivation behind quantitative work in international trade and many other fields is to shed light on the economic consequences of policy changes and other shocks. To help assess and potentially strengthen the credibility of such quantitative predictions, we introduce an IV-based goodness-of-fit measure that provides the basis for testing causal predictions in arbitrary general equilibrium environments as well as for estimating the average misspecification in these predictions. As an illustration of how to use the measure in practice, we revisit the welfare consequences of the U.S.-China trade war predicted by Fajgelbaum et al. (2020).

A large agronomic literature models the implications of climate change for a variety of crops and locations around the world. The goal of the present paper is to quantify the macro-level consequences of these micro-level shocks. Using an extremely rich micro-level data set that contains information about the productivity—both before and after climate change—of each of 10 crops for each of 1.7 million fields covering the surface of the earth, we find that the impact of climate change on these agricultural markets would amount to a 0.26 percent reduction in global GDP when trade and production patterns are allowed to adjust. Since the value of output in our 10 crops is equal to 1.8 percent of world GDP, this corresponds to about one-sixth of total crop value.