Tourism Expansion and Economic Development: Var/Vecm Analysis and Forecasts for the Case of India
AbstractThis 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Asian Economic and Social Society in its journal Asian Economic and Financial Review.
Volume (Year): 3 (2013)
Issue (Month): 4 (April)
Contact details of provider:
Postal: Sadeeq Block, Near Fawara Chowk, Abbasia Town, Rahim Yar Khan - 64200, Punjab, Pakistan
Web page: http://www.aessweb.com/
Tourism; Economic Growth; Cointegration; Forecasts; India;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jacint Balaguer & Manuel Cantavella-Jorda, 2002.
"Tourism as a long-run economic growth factor: the Spanish case,"
Taylor & Francis Journals, vol. 34(7), pages 877-884.
- Jacint Balaguer & Manuel Cantavella-Jordá, 2000. "Tourism As A Long-Run Economic Growth Factor: The Spanish Case," Working Papers. Serie EC 2000-10, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- repec:asi:aeafrj:2012:p:518-529 is not listed on IDEAS
- Pesaran, M. H. & Shin, Y., 1997.
"Generalised Impulse Response Analysis in Linear Multivariate Models,"
Cambridge Working Papers in Economics
9710, Faculty of Economics, University of Cambridge.
- Pesaran, H. Hashem & Shin, Yongcheol, 1998. "Generalized impulse response analysis in linear multivariate models," Economics Letters, Elsevier, vol. 58(1), pages 17-29, January.
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Elias Soukiazis & Sara Proença, 2008. "Tourism as an alternative source of regional growth in Portugal: a panel data analysis at NUTS II and III levels," Portuguese Economic Journal, Springer, vol. 7(1), pages 43-61, April.
- Azmat Gani, 1998. "Macroeconomic determinants of growth in the South Pacific island economies," Applied Economics Letters, Taylor & Francis Journals, vol. 5(12), pages 747-749.
- Johansen, Soren & Juselius, Katarina, 1990. "Maximum Likelihood Estimation and Inference on Cointegration--With Applications to the Demand for Money," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 52(2), pages 169-210, May.
- E. Çaglayan & N. Sak & K. Karymshakov, 2012. "Relationship between Tourism and Economic Growth: A Panel Granger Causality Approach," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(5), pages 591-602, September.
- Brida, Juan Gabriel & Pereyra, Juan S. & Risso, Wiston Adrián & Devesa, María Jesús Such & Aguirre, Sandra Zapata, 2008. "The Tourism-led Growth Hypothesis: Empirical Evidence from Colombia," MPRA Paper 25286, University Library of Munich, Germany, revised 19 Mar 2009.
- Jordan Shan & Ken Wilson, 2001. "Causality between trade and tourism: empirical evidence from China," Applied Economics Letters, Taylor & Francis Journals, vol. 8(4), pages 279-283.
- Lokman Gunduz & Abdulnasser Hatemi-J, 2005. "Is the tourism-led growth hypothesis valid for Turkey?," Applied Economics Letters, Taylor & Francis Journals, vol. 12(8), pages 499-504.
- Juan Luis Eugenio-Martín & Noelia Martín Morales & Riccardo Scarpa, 2004. "Tourism and Economic Growth in Latin American Countries: A Panel Data Approach," Working Papers 2004.26, Fondazione Eni Enrico Mattei.
- Koop, Gary & Pesaran, M. Hashem & Potter, Simon M., 1996. "Impulse response analysis in nonlinear multivariate models," Journal of Econometrics, Elsevier, vol. 74(1), pages 119-147, September.
- Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July.
- Johansen, Soren, 1988. "Statistical analysis of cointegration vectors," Journal of Economic Dynamics and Control, Elsevier, vol. 12(2-3), pages 231-254.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Qazi Muhammad Imran).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.