A Federal Highway Bill was enacted in 1987 in response to many state governments' increasing concerns that the 55-mph national maximum speed limit was unduly restrictive. The bill permitted states to raise the maximum speed limit to 65 mph on most rural interstate highways, which historically have been the safest. The state of Indiana reacted promptly to the enabling legislation by raising the maximum speed limit on its rural interstate highways to 65 mph as of June 1, 1987. This paper uses cross-section/time-series data to estimate a model of highway safety. The primary empirical finding is that the higher speed limit on rural interstates has increased the incidence of total and injury interstate accidents but not of fatal interstate accidents. However, for the state as a whole, the relaxed speed limit has reduced total and injury accidents with no effect on fatal accidents. This indicates that the impact of speed limit legislation on non-interstate roads has more than offset its effect on interstate highways. Copyright 1991 Western Economic Association International.
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