Tourism and economic growth revisited: Empirical evidence from a Panel VAR approach

Antonakakis, Nikos and Dragouni, Mina and Eeckels, Bruno and Filis, George (2015): Tourism and economic growth revisited: Empirical evidence from a Panel VAR approach.

Abstract

The current literature on the tourism-economic growth causal relationship has not yet reached to a clear empirical consensus. The aim of this paper is to revisit this ambiguous relationship by examining the dynamics between tourism and economic growth from a more holistic view. In particular, we focus on 113 countries over the period 1995-2011, which we group into clusters based on six different criteria. A Panel Vector Autoregressive model is employed to reveal the tourism-economy interdependencies across these clusters. Overall, our findings cannot support the tourism-led economic growth hypothesis in any of our clusters. Rather, the economic-driven tourism growth hypothesis seems to prevail is most cases, although some short-lived bidirectional causalities are also identified. Thus, depending on the level of tourism competitiveness and economic development different policy implications apply.

• Item Type: MPRA Paper
• Language: English
• Keywords: Tourism income, economic growth, panel vector autoregressive model, generalised impulse responses, clusters.
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C32 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes ; State Space Models; F - International Economics > F4 - Macroeconomic Aspects of International Trade and Finance > F43 - Economic Growth of Open Economies; L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O57 - Comparative Studies of Countries

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