Junwook Chi

Dynamic relationship between air transport demand and economic growth in the United States: A new look

Abstract This paper examines the short- and long-run effects of economic growth and market shocks (e.g., 9/11 terrorist attacks, Iraq war, SARS epidemic, and 2008 financial crisis) on air passenger and freight services using an autoregressive distributed lag (ARDL) approach to cointegration. Results show that, in the long-run, both air passenger and freight services tend to increase with economic growth. In the short-run, however, only air passenger service is responsive to economic growth. Finally, only the 9/11 terrorist attacks and the SARS have detrimental effects on air passenger demand both in the short- and long-run, and in the long-run, respectively. However, these market shocks are found to have little impact on air freight demand.

Dynamic impacts of income and the exchange rate on US tourism, 1960-2011.

This paper examines the short-run and long-run impacts of income and exchange rates on US exports and imports of tourism to improve understanding of the dynamic determinants of the US tourism trade balance. Using the bounds testing to cointegration procedure and data for the period 1960–2011, the paper finds that in the long run both US exports and imports of tourism are highly responsive to changes in real income, implying that the relative growth of foreign to domestic income is the key determinant of the US tourism trade balance. The real exchange rate is found to be a significant long-run factor affecting that balance. This finding indicates that an appreciation (depreciation) of US dollars deteriorates (improves) the US tourism trade balance. In the short run, income tends to have a significant impact on US exports and imports of tourism.

Identifying the policy implications of barge shipments of grains on the US inland waterway system: the case of corn movements on the Mississippi waterway

The Johansen cointegration analysis and a vector error correction model are used to examine the dynamic relationships among the quantity of corn shipped by barge, barge and rail rates, domestic corn production and domestic corn consumption on the Mississippi River. Results show that, in the long-run, the barge rate and domestic corn production are weakly exogenous in the model and have significant effects on the demand for corn barge transportation. This implies that these two variables play crucial roles in determining the long-run movement of barge shipments of corn, while they are not affected by other variables. In the short-run, on the other hand, the rail rate and domestic corn consumption are found to have significant impacts on changes in the demand for corn barge transportation. The results are not consistent between the short-run and long-run analyses and this further explains why it is important to incorporate both short- and long-run dynamics in the demand model for US grain barge transportation.

Research Note: Employment and Wage Sensitivity to Tourism Activities – The Case of US Tourist Arrivals and Expenditure in Hawaii

This study explores the dynamic effects of US employment, real wages, employee overtime hours, travel costs and market shocks on tourism demand to Hawaii from the US mainland. The results show that US tourist arrivals and expenditure in Hawaii are sensitive to a change in total employment. These findings suggest that employment growth is a driving force of US tourism demand for Hawaii. In examining the magnitudes of the income and substitution effects of a change in real wages, the income effect is found to outweigh its substitution effect, indicating that a rise in income resulting from a higher wage increases tourist expenditure in the USA. In addition, the 2001 terrorist attacks and the 2008 financial crisis have had detrimental impacts on tourism demand for Hawaii destinations.

Transport Infrastructure and Macroeconomic Performance in European Countries: Dynamic Panel Data Approach

The share of investment in transport infrastructure of the gross domestic product (GDP) has risen substantially in central and eastern European countries, and the effectiveness of public investment in transport infrastructure to improve economic performance is receiving increasing attention. This paper explores the dynamic impact of transport infrastructure on employment, GDP, exports, and industry production in European countries. With the use of data from 1995 to 2010, the paper analyzes the causality among variables in a dynamic panel framework. The results reveal that transport infrastructure and macroeconomic indicators are cointegrated and a significant unidirectional causal relationship exists from public investment in transport infrastructure to economic performance. The findings of this paper support the traditional notion that an increase in government spending on transport infrastructure contributes to economic growth. More specifically, the paper finds that transport infrastructure is a forcing variable of economic output and exports of European countries. Examination of the economic impacts of transport infrastructure between developed and developing economies shows that economic performance of central and eastern European countries is more sensitive to a change in investment in transport infrastructure than that of Western European countries. A major policy implication of these findings is that expanding transportation infrastructure could be an effective fiscal policy tool to boost economic performance of developing European economies.