Temporal Granger Causality and the Dynamics Relationship Between Real Tourism Receipts, Real Income and Real Exchange Rates in Malaysia


Correspondence to: C. F. Tang, Department of Economics, Faculty of Economics and Administration, University of Malaya, 50603 Kuala Lumpur, Malaysia.

E-mail: tcfoon@yahoo.com


This study applies the bounds testing approach, error-correction modelling and persistence profile to analyse the dynamic relationship between real tourism receipts, real income and real exchange rates in Malaysia. The present study covers the annual sample period from 1974 to 2009. The results reveal that a long-run relationship exists between the variables. In the short run, this study finds no Granger causality between real tourism receipts and real income, whereas there is bidirectional causality in the long-run. Moreover, we also find unidirectional causality running from real exchange rates to real tourism receipts and real income in both short- and long-run. Copyright © 2012 John Wiley & Sons, Ltd.