THE CAUSAL RELATIONSHIP BETWEEN GDP AND AIR PASSENGER TRAFFIC: EVIDENCE FROM SINGAPORE

The causality relationship between gross domestic product and air passenger traffic is deliberated by many researchers in the field of aviation. While some take aviation as a key driver of Singapore's success, others believe that it is country's value of economic activity that enabled mult...

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Bibliographic Details
Published in:Rivista internazionale di economia dei trasporti 2018-03, Vol.45 (1), p.83-95
Main Authors: Raheja, Dewansh, Zhong, Z. W.
Format: Article
Language:English
Subjects:
Air
Airports
Aviation
Causality
Economic activity
Economic models
ESSAYS
GDP
Gross Domestic Product
Infrastructure
Regional development
Traffic
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Summary:The causality relationship between gross domestic product and air passenger traffic is deliberated by many researchers in the field of aviation. While some take aviation as a key driver of Singapore's success, others believe that it is country's value of economic activity that enabled multinational business and people to travel. This paper is an attempt to investigate the causal relationship between air passenger traffic and GDP in Singapore, using annual data from 1980 to 2015. This paper utilizes Engel-Granger procedure, Johansen-Juselius cointegration methodology and granger causality test to analyze this relationship. Our empirical results show no long run co-integration relationship between both but short run unidirectional causality running from air passenger traffic to GDP. This study also provides reasonable evidence to support aviation-led growth hypothesis for Singapore. The significance of air passenger traffic confirms the importance of airport development and the need to maintain local airport infrastructure. Hence, for Singapore to support regional development, funding should be targeted at the airport directly.
ISSN:0303-5247
1724-2185
DOI:10.19272/201806701005