Do Tourism Receipts Contribute to the Sustainability of Current Account Deficits: A Case Study of Barbados

Lorde, Troy and Lowe, Shane and Francis, Brian (2010): Do Tourism Receipts Contribute to the Sustainability of Current Account Deficits: A Case Study of Barbados. Published in: International Journal of Tourism Research , Vol. 15, : pp. 620-624.

Abstract

Given Barbados’ recent history of persistent current account deficits and reliance on tourism as a major source of foreign exchange and driver of the economy, this paper investigated the contribution of tourism receipts to the sustainability of Barbados’ current account deficits. Utilizing an inter-temporal budget approach, it was found that Barbados’ current account deficits were weakly sustainable as a result of tourism’s contribution, underscoring the island’s dependence on the industry.

• Item Type: MPRA Paper
• Language: English
• Keywords: inter-temporal budget approach; current account deficits; sustainability; tourism receipts; Barbados; SITES
• Subjects: F - International Economics > F3 - International Finance > F32 - Current Account Adjustment ; Short-Term Capital Movements; H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H27 - Other Sources of Revenue; H - Public Economics > H6 - National Budget, Deficit, and Debt > H62 - Deficit ; Surplus; L - Industrial Organization > L8 - Industry Studies: Services > L83 - Sports ; Gambling ; Restaurants ; Recreation ; Tourism

References

Chow G. 1960. Tests of equality between sets of coefficients in two linear regressions. Econometrica 20(3): 591–605.

Granger CWJ. 1969. Investigating causal relation by econometric and cross-sectional method. Econometrica 37(3): 424–438.

GriffithW. 2002. A tale of four CARICOM countries. Journal of Economic Issues 36(1): 79–106.

Hakkio CJ, Rush M. 1991. Is the budget deficit too large? Economic Inquiry 29: 425–429.

Husted S. 1992. The emerging US current account deficit in the 1980s: A cointegration analysis. The Review of Economic and Statistics 74: 159–166.

Hylleberg S, Engle R, Granger C, Yoo B. 1990. Seasonal integration and cointegration. Journal of Econometrics 44(1–2): 215–238.

Johansen S. 1988. Statistical analysis of cointegrating vectors. Journal of Economic Dynamics and Control 12: 231–254.

Johansen S. 1991. Estimation and hypothesis testing of cointegration vectors in Guassian vector autoregressive models. Econometrics 59: 1551–1580.

Kwiatkowski D, Phillips P, Schmidt P, Shin Y. 1992. Testing the null hypothesis of stationarity against the alternative of a unit root. Journal of Econometrics 54: 159–178.

Lanne M, Lutkepohl H, Saikkonen P. 2002. Comparison of unit root tests for time series with level shifts. Journal of Time Series Analysis 23: 667–685.

Ongan S. 2008. The sustainability of current account deficits and tourism receipts in Turkey. The International Trade Journal 22(1): 30–62.

Quintos CE. 1995. Sustainability of the deficit process with structural shifts. Journal of Business and Economic Statistics 13(4): 409–417.

Wu J-L. 2000. Mean reversion of the current account: Evidence from panel data unit-root Test. Economic Letters 66: 215–222.