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The Causal Relationship between Tourist Arrivals and Economic Growth Evidence from Indonesia

Author

Listed:
  • Muhamad FADILAH

    (Faculty of Economics State University of Jakarta Indonesia)

  • Haryo KUNCORO

    (Faculty of Economics State University of Jakarta Indonesia)

  • K Dianta SEBAYANG

    (Faculty of Economics State University of Jakarta Indonesia)

Abstract

The main motivation behind this research because nowadays tourism becomes one of the major industries in Indonesia However literature on the causal relationship between the cyclical components of tourist arrivals and economic growth revealed inconclusive especially in the developing countries as Indonesia This paper aims at investigating whether foreign tourist arrivals contribute to economic growth evidence from Indonesia over the period 2004 1 2016 12 Then this research was applied the vector autoregressive VAR model Afterwards we exploited Hodrick Prescott de trending procedure to obtain cyclical components of tourist arrivals and economic growth By using the test of Granger causality we found that causality running from tourist arrivals to economic growth Furthermore the VAR model shows that tourist arrivals were pro cyclical to economic growth implied that the increase of tourist arrivals promote the economic growth so that foreign tourist arrivals could be the key to escalate Indonesia s economic growth in short term

Suggested Citation

  • Muhamad FADILAH & Haryo KUNCORO & K Dianta SEBAYANG, 2018. "The Causal Relationship between Tourist Arrivals and Economic Growth Evidence from Indonesia," Journal of Advanced Research in Management, ASERS Publishing, vol. 9(4), pages 721-732.
    • Handle: RePEc:srs:jemt00:v:9:y:2018:i:4:p:721-732
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