Time-series modeling of air passengers fow and its impact on the national economy
Author
Al-Kharusiyah, Huda Hilal.
English abstract
This study investigates the relationship between air travel demand (passenger uplifts: PAX) and the economic growth of Oman (GDP) by taking quarterly data from January 1995 to December 2010. Attention is paid to some stationarity features, the existence of long run relationship between the variables under study by estimating different cointegration models such as Engle-Granger (1987) of two steps estimation procedure, Hansen-Covariate (1995) who developed Dickey and Fuller test of cointegrated equations, Phillips and Ouliaris (1998) residuals based tests and Johansen's multivariate technique. The error correction procedure is adopted to some of these models to explain the effect of the relationship in the short and long-run terms. The statistical software (R) is used to test the cointegration relation. Forecasting procedure is implemented to compare the efficiency of the perspective models. The findings of this study suggest that PAX and GDP are cointegrated. The techniques used are all not consistent in terms of estimating the long run relationship; however all of the tests detect only one cointegrating relation. The study recommends the use of Error correction of Hansen covariate model for forecasting since it gives more efficient forecast estimates based on minimum error measurement. The empirical analysis has an evidence of the multiplier effects of air transport on the economy.
