Causality between business travel and trade volumes: Empirical evidence from Hong Kong

The study employed the Engle‒Granger vector autoregressive model to investigate the causality relationship between business travel and trade volumes among Hong Kong and Mainland China, Taiwan, and the United States (US) from 2002Q1 to 2012Q4. This study presented evidence that a long-run equilibrium relationship (cointegration) between Hong Kong and the US. Additionally, the US showed bidirectional causality between the two time series variables; however, business travel does Granger-cause trade volumes for the case of Mainland China and Taiwan. The concept of the linkage between business travel and trade volumes was demonstrated in this study. Significantly, this study is expected to benefit Hong Kong policy makers by enabling better planning to attract and understand the fluctuations in international business visitors from its three key trading partners.