Dynamic relationship between air transport and economic growth in Italy: a time series analysis

This paper studies the causal relationship between air transport demand and economic growth in Italy for the period 1971-2012. Johansen cointegration analysis shows the existence of one cointegrated vector between real GDP and air transport (represented by aircrafts movements) where the corresponding elasticities are positive. The Granger Causality test shows that causality goes unidirectionally from air-transport to GDP. The results imply that Italy can improve its economic growth performance by strategically harnessing the contribution of the air transport industry and improving their governance performance. Although air transport industry has grown significantly in Italy, there are no empirical analyses, to our knowledge, regarding European region as an entire case of study, neither the particular case of Italy. Therefore, the value of this work is that it deals with the dynamics between the air transport sector and the Italian economy.