The Ripple Effects of a Tunnel: Predicting Changes in Swedish Trade Flows from the Fehmarnbelt Fixed Link : An Empirical Forecast of Truck-Based Bilateral Trade Flows Between Sweden and Western Europe

This thesis investigates how the Fehmarnbelt Fixed Link, a major infrastructure project connecting Denmark and Germany, is expected to affect Swedish trade with selected Western European countries. Focusing on goods transported by truck, the study applies a gravity model of trade using detailed, route-based travel times and bilateral trade data from 1998 to 2023. The model estimates trade elasticities and generates counterfactual forecasts of trade flows assuming reduced transport times once the link becomes operational. Results suggest a modest but economically meaningful increase in Swedish trade, with imports responding more strongly than exports. While the magnitude of the effects varies across countries and product groups, the overall findings emphasize the broader role of transport infrastructure in shaping trade flows. The study contributes to a growing body of research on infrastructure-driven trade dynamics and offers relevant insights for policymakers involved in regional connectivity and economic integration.