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Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models

Author

Listed:
  • Hu, Yi
  • Xiao, Jin
  • Deng, Ying
  • Xiao, Yi
  • Wang, Shouyang

Abstract

This paper applies recent panel methodology to examine the short-run dynamics, the long-run equilibrium relationships and the Granger causal relationship between economic growth and domestic air passenger traffic. It is based on the quarterly panel data of 29 provinces in China from the period of 2006Q1 to 2012Q3. Tests for panel unit roots, cointegration in heterogeneous panels and panel causality are employed in a bi-variate panel vector error correction model (PVECM), which is estimated by the system generalized moment method (SYS-GMM). The results show evidence of a long-run equilibrium relationship between economic growth and domestic air passenger traffic. Specifically, 1% increase in the air passenger traffic is found to lead to an increase of 0.943% in real gross domestic product (GDP). A long-run and strong bi-directional Granger causal relationship is found between these two series. It is also found that there is a short-run uni-directional Granger causality running from the domestic air passenger traffic to the economic growth.

Suggested Citation

  • Hu, Yi & Xiao, Jin & Deng, Ying & Xiao, Yi & Wang, Shouyang, 2015. "Domestic air passenger traffic and economic growth in China: Evidence from heterogeneous panel models," Journal of Air Transport Management, Elsevier, vol. 42(C), pages 95-100.
    • Handle: RePEc:eee:jaitra:v:42:y:2015:i:c:p:95-100
    DOI: 10.1016/j.jairtraman.2014.09.003
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    More about this item

    Keywords

    Air passenger traffic; Economic growth; Heterogeneous panels; Panel Granger causality;
    All these keywords.

    JEL classification:

    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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