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This paper applied the cointegration, error-correction modeling and persistence profile to analyse the dynamic relationship between real tourism receipts, real income and real exchange rate in Malaysia. This paper covers the annual sample period from 1974 to 2009. This paper finds that the variables are cointegrated. In the short run, this study finds that neutrality causality between real tourism receipts and real income, while they are bi-directional Granger causality in the long run. Nevertheless, this paper finds unidirectional causality running from real exchange rate to real tourism receipts and real income in both short- and long run.
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