Investigating the Short-Run and Long-Run Causality Relationship between Air Transportation and Economic Growth (Case Study: Iran's Provinces)

Transportation activities and related services can be considered as a link between all sectors and economic activities, and it is considered as one of the factors influencing the development of the economy. Considering the position of the transportation sector in the economy, the purpose of this study is to investigate the short and long-term causality relationship between transport variables and economic growth in Iran's provinces. In this regard, the variables of the volume of freight transported through the air transport fleet and the number of its passengers are considered as representative of the transportation sector. For this purpose, using panel data during the years 2005-2017 and cointegration approaches, Dynamic Least Squares (DOLS), Vector Error Correction Model (VECM), and Granger causality method, examined the long-term and short-run causality relationships among the above variables. The results of this study show that in the short run, the Granger causality relationship is not significant between these variables, but according to the output of the DOLS model, in the long run, the positive effect of the number of passengers on economic growth is greater than the volume of load. In this study, the error correction component, which indicates the speed of adjusting the short run to long-term equilibrium, has been evaluated. Estimates show that there is a one-way Granger causality relation between the volume of displaced load and economic growth. Also, this relationship for the number of passengers and economic growth variables is one-way from passenger to economic growth.