Economic Growth Relations to Domestic and International Air Passenger Transport in Brazil

Authors: Manoela Cabo da Silva, Elton Fernandes, Ricardo Pacheco, Heloisa Pires

Abstract:

This study examined cointegration and causal relationships between economic growth and regular domestic and international passenger air transport in Brazil. Total passengers embarked and disembarked were used as a proxy for air transport activity and gross domestic product (GDP) as a proxy for economic development. The test spanned the period from 2000 to 2015 for domestic passenger traffic and from 1995 to 2015 for international traffic. The results confirm the hypothesis that there is cointegration between passenger traffic series and economic development, showing a bi-directional Granger causal relationship between domestic traffic and economic development and unidirectional influence by economic growth on international passenger air transport demand. Variance decomposition of the series showed that domestic air transport was far more important than international transport to promoting economic development in Brazil.

Keywords: Air passenger transport, cointegration, economic growth, GDP, granger causality.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1475036

References:

[1] ABEAR, “Panorama 2014: O setor aéreo em dados e análises,” Associação Brasileira de Empresas Aéreas (ABEAR), 2015, Rio de Janeiro.
[2] ATAG, “Aviation benefits beyond borders. Air Transport Action Group,” (ATAG), Geneva, 2015.
[3] Fernandes, E., Pacheco, R. R., “The causal relationship between GDP and domestic air passenger traffic in Brazil. Transportation Planning and Technology,” 33 (7), 2010, 569-581.
[4] Kuledran, N., Wilson, K., “Is there a relationship between international trade and international travel?” Applied Economics 32 (8), 2000, 1001-1008.
[5] Chang, Y.-H., Chang, Y.-W., “Air cargo expansion and economic growth: Finding the empirical link,” Journal of Air Transport Management 15 (5), 2013, 264-265.
[6] Marazzo, M., Scherre, R., Fernandes, E., “Air transport demand and economic growth in Brazil: A time series analysis,” Transportation Research Part E 46 (2), 2010, 261-269.
[7] Button, K., Yuan, J, “Airfreight Transport and Economic Development: An Examination of Causality,” Urban Studies 50 (2), 2013, 329-340.
[8] Mehmood, B., Kiani, K., “An inquiry into nexus between demand for aviation and economic growth in Pakistan,” Academicia 3 (10), 2013, 200-211.
[9] Mehmood, B., Shahid, A., “Aviation Demand and Economic Growth in the Czech Republic: Cointegration Estimation and Causality Analysis,” Statistika 94 (1), 2014, 54-63.
[10] Van De Vijver, E., Derudder, B., Witlox, F., “Exploring causality in trade and air passenger travel relationships: the case of Asia-Pacific,” 1980-2010. Journal of Transport Geography 34, 2014, 142-150.
[11] Hu, Y., Xiao, J., Deng, Y., Xiao, Y., Wang, S., “Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models,” Journal of Air Transport Management 42, 2015, 95-100.
[12] Rodríguez-Brindis, M. A., Mejía-Alzate, M., Zapata-Aguirre, S., “La causalidad entre el crecimiento económico y la expansión del transporte aéreo: un análisis empírico para Chile,” Revista de Economía del Rosario 18 (1), 2015, 127-144.
[13] Baker, D., Merkert, R., Kamruzzaman, M., “Regional aviation and economic growth: cointegration and causality analysis in Australia,” Journal of Transport Geography 43, 2015, 140-150.
[14] Soytas, U., Sari, R., “Energy consumption and GDP: causality relationship in G-7 countries and emerging markets,” Energy Economics, 25 (1), 2003, 33-37.
[15] Dickey, D. A., Fuller, W. A., “Distribution of the estimators for autoregressive time series with a unit root,” Journal of the American Statistical Association 74 (366a), 1979, 427-431.
[16] Fuller, W. A., “Introduction to Statistical Time Series,” Wiley, 1976, New York.
[17] Said, S. E., Dickey, D. A., “Testing for unit roots in autoregressive-moving average models of unknown order,” Biometrika 71 (3), 1984, 599-607.
[18] Johansen, S., “Estimation and Hypothesis testing of cointegrating vectors in Gaussian vector autoregressive models,” Econometrica, 59 (6), 199, 1551-1580.
[19] Johansen, S., “Likelihood-based inference in cointegrated vector autoregressive models,” Oxford University Press, 1995, Oxford.
[20] Engle, R. F., Granger, C. W. J. “Co-integration and error correction: representation, estimation and testing,” Econometrica 55 (2), 1987, 251-276.
[21] Hassapis, C., Pittis, N., Prodromidis, K., “Unit roots and granger causality in the EMS interest rates: the German dominance hypothesis revisited,” Journal of International Money and Finance, 18 (1), 1999, 47-73.
[22] Toda, H., Phillips, P.C.B., “Vector autoregressions and causality,” Econometrica 61 (6), 1993, 1367-1394.
[23] Toda, H., Phillips, P. C. B., “Vector autoregressions and causality: a theoretical overview and simulation study,” Econometric Reviews 13 (2), 1994, 259-285.
[24] Granger, C. W. J., “Causality, cointegration and control.,”. Journal of Economic Dynamics & Control 12 (2-3), 1988, 551-559.
[25] Fernandes, E., Pacheco, R. R., “Transporte aéreo no Brasil: uma visão de mercado,” Elsevier, 2016, Rio de Janeiro.
[26] MacKinnon, J. G., “Numerical distribution functions for unit root and cointegration tests,” Journal of Applied Econometrics, 1996, 11, 601–618.
[27] MacKinnon, J. G., A. A. Haug, and L. Michelis, “Numerical distribution functions of likelihood ratio tests for cointegration,” Journal of Applied Econometrics,1999, 14, 563–577.