TOURISM EXPANSION AND ECONOMIC DEVELOPMENT: VAR/VECM ANALYSIS AND FORECASTS FOR THE CASE OF INDIA
Journal Title: Asian Economic and Financial Review - Year 2013, Vol 3, Issue 4
Abstract
This study tests for the existence and direction of causality between output growth and tourism expenditure using a trivariate model with real effective exchange rate (REER), analysed as a whole and in sub-categories (i.e. leisure travel and tourism expenditures, LTS and business travel and tourism expenditures, BTS) during the period 1988-2011 for India. For this purpose exhaustive empirical evidence are provided from the application of Phillips-Perron and KPSS unit root tests, Johansen cointegration tests, VAR models with an error-correction term, impulse responses, variance decompositions and forecasts generated from the VAR/VECM models. Results for the aggregated model indicate that all variables return to their long-run equilibrium relationships although this model failed to support the significance of causal links between total tourism expenditure and India’s real output. However, the application of the disaggregated model imply strong bidirectional causal links between growth and LTS in the long-run and unidirectional causal links from LTS and BTS to growth suggesting direct impact of tourism on the Indian real output. Finally, forecasts generated for the period 2012-2016 are promising; total tourism expenditure compared to the previous half-decade will grow at a similar pace and optimistic forecasts are generated for the case of LTS, BTS and GDP.
Authors and Affiliations
Andreas G. Georgantopoulos| Panteion University of Political and Social Sciences Dept. of Public Administration
Keywords
Related Articles
- EP ID EP1903
- DOI -
- Views 449
- Downloads 31
Tax Structure and Economic Growth in Côte d’Ivoire: Are Some Taxes Better Than Others?
This paper examines the relationships between taxation and output in Côte d’Ivoire during the period 1960-2006. The bounds testing approach to cointegration devised by Pesaran et al. (2001) showed that tax variables, exc...
Wage rate, regional trade bloc and Location of Foreign Direct Investment Decisions
The objective of this paper is to examine the impact of wage rate on FDIlocation in South East Asia in the presence of trading systems (regional andmultilateral trading systems) drawing example from panel data of fiveASE...
INVESTIGATING THE HOUSING PRICE BUBBLE IN METROPOLISES OF IRAN DURING 2000-2006
Non-optimal allocation of resources, increased levels of speculative activities, increased transfer of capital in asset market can be considered as the main results of housing price bubble. The main reason for the import...
Are Real Devaluations Contractionary? an Empirical Analysis for Pakistan
The failure of Bretton Woods system in 1970s diverted the attention of the researchers and policy makers from the orthodox wisdoms of elasticities, absorptions and Keynesian towards the new structuralist theories of cont...
PRODUCT MARKET STRUCTURE AND EARNINGS QUALITY: EVIDENCE TEHRAN STOCK EXCHANGE
The purpose of this paper is to examine the relationship between product market structure and earnings quality in listed companies of Tehran Stock Exchange. To achieve this goal, we used Herfindahl - Hirschman Index, Ler...