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The Validity of the Tourism-Led Growth Hypothesis for Thailand

Jiranyakul, Komain (2018): The Validity of the Tourism-Led Growth Hypothesis for Thailand.

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This paper explores the validity of the tourism-led growth hypothesis for Thailand using quarterly data during 2006 and 2017. The results from the residual-based test for cointegration show that the positive long-run relationship between tourism receipts and real GDP is linear when taking into account the existence of structural breaks. Furthermore, the results from short-run dynamics reveal that this long-run linear relationship is stable since any deviation from the long-run equilibrium will be corrected. The possibility of asymmetric adjustment to long-run equilibrium is also examined by using threshold cointetration tests, TAR and MTAR models. The estimated MTAR indicates the existence of nonlinearity, but asymmetric adjustment to the long-run equilibrium is not found. The causality analysis suggests that there is short-run causality running from tourism receipts to real GDP in the lower regime from the estimated MTAR model. On the contrary, long run causality is evidenced. The overall results suggest that the tourism-led growth hypothesis holds for Thailand. The findings in this paper give some policy implications.

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