The Effects Of The Exchange Rate And Income On Cross-Border Travel From West Kalimantan To Sarawak

Bong, Sze Yii (2013) The Effects Of The Exchange Rate And Income On Cross-Border Travel From West Kalimantan To Sarawak. [Final Year Project Report] (Unpublished)

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Abstract

This study attempts to investigate the effects of the exchange rate and income on cross-border travel from West Kalimantan to Sarawak by using quarterly data that covers the period of 2001 to 2011. By using Johansen and Juselius cointegration test, the results indicated that the long run relationship exists between the variables. The Granger causality tests based on VECM shows unidirectional causality running from Gross Domestic Product per capita (GDPPC) to cross-border travel, implying that GDPPC does Granger-cause cross-border travel but not vice versa. The findings have proved that the currency of Ringgit has a negative impact on the number of cross-border travelers while the GDPPC has a positive relationship to the cross-border travel. This study suggests that the government should adopt an appropriate exchange rate regime wisely and give effort to further develop the State’s economy in order to promote cross-border travel.

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