The impact of air transportation on economic growth: Novel findings from the CS-ARDL model

This study examines the effect of air transportation in terms of its two outputs, passenger and cargo transportation, on economic growth in developing and developed economies. For this purpose, the cross-sectional autoregressive distributed lags estimator (CS-ARDL) was used with the number of air passengers, cargo volume, and GDP data from 1980 to 2021 for each country group to investigate the relationship between variables in the long and short run. In addition, the Augmented Mean Group (AMG) and Common Correlated Effects Mean Group Estimators (CCE) were applied for robustness. Also, the causality relationship between air passenger and economic growth and air freight and economic growth was investigated by Emirmahmutoglu and Kose (2011) panel causality methodology. According to the findings of all estimators used, it was determined that air passenger and air cargo volumes positively affected GDP in each group in both the short and long run. Panel causality test (Emirmahmutoglu and Kose, 2011) shows that unidirectional causality runs from air passenger to economic growth in developed and developing countries and unidirectional causality from economic growth to air cargo in developed countries. • CS-ARDL findings for air passenger and cargo transport effects on growth in developed and developing nations. • GDP is positively linked to air passenger and cargo volumes in developed and developing nations in the short- and long-term. • Panel Granger causality test, which accommodates heterogeneity and cross-sectional dependence, has been applied. • A unidirectional causality from the air passenger volume to economic growth in both the developed and developing countries. • A unidirectional causality from economic growth to air freight volume in the developed country group.