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Structural breaks, tourism development, and economic growth: Evidence from Taiwan

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  • Lee, Chien-Chiang
  • Chien, Mei-Se

Abstract

Our paper differs from previous studies by examining the issue of whether regime changes have broken down the stability of the long-run relationships between tourism development and real GDP in Taiwan for the 1959–2003 period. We empirically investigate the co-movements and the causal relationships among real GDP, tourism development, and the real exchange rate in a multivariate model. We use two different tourism variables—international tourism receipts and number of international tourist arrivals. To employ the unit root tests and the cointegration tests allowing for a structural break, the empirical evidence clearly shows that the causality between tourism and economic growth is bi-directional. Lastly, the international and cross-strait political change, economic shocks, and the relaxing of some tourism control and policies would break down the stability of the relationships between tourism development and economic growth. Overall, we do find the structural breakpoints, and they look to match clearly with the corresponding critical economic, political, or tourist incidents.

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Bibliographic Info

Article provided by Elsevier in its journal Mathematics and Computers in Simulation (MATCOM).

Volume (Year): 77 (2008)
Issue (Month): 4 ()
Pages: 358-368

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Handle: RePEc:eee:matcom:v:77:y:2008:i:4:p:358-368

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Web page: http://www.journals.elsevier.com/mathematics-and-computers-in-simulation/

Related research

Keywords: Tourism development; Economic growth; Structural break; Taiwan;

References

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Cited by:
  1. Jin, Hao & Tian, Zheng & Qin, Ruibing, 2009. "Subsampling tests for the mean change point with heavy-tailed innovations," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 79(7), pages 2157-2166.
  2. Chou, Ming Che, 2013. "Does tourism development promote economic growth in transition countries? A panel data analysis," Economic Modelling, Elsevier, vol. 33(C), pages 226-232.

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