Exploring Dynamic Relationships Between Air Transportation and Economic Growth in South America

This Chapter undertakes an empirical analysis of the relationship between air transport demand and economic growth in Uruguay, Brazil, Argentina, and Chile, using annual data from 1970 to 2019. The results indicate a cointegration relationship between air passenger movements, real exchange rate, and GDP for Brazil and Uruguay, but not for Argentina, while for Chile bivariate cointegration exists. Moreover, exogeneity analysis and impulse response simulations show that in the long run there is a bidirectional causality between transport and economic growth for Uruguay, but for Brazil air transport is not influenced by GDP growth. Air transport is, however, positively affected in the long run by Chile's GDP growth. For Argentina, the probability of causality from air transport to economic growth is low and conversely is not significant.