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Computable general equilibrium modelling: an important tool for tourism policy analysis

Author

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  • Larry Dwyer

    (University of New South Wales, School of Marketing, Australia)

Abstract

Purpose – Economic impact analysis in tourism has recently undergone a profound change in approach. In contrast to earlier emphasis on input-output (I-O) models, computable general equilibrium (CGE) models, are being used worldwide to estimate the resulting net macroeconomic and industry effects and for tourism policy analysis. The purpose of this paper is to provide an overview of the role that computable general equilibrium modelling is playing and can play in estimating the economic impacts of tourism shocks and in tourism policy formulation and implementation by destination managers. Design – The study discusses the nature of CGE modelling to project the economic impacts of tourism demand shocks, comparing its advantages over standard I-O analysis. It then identifies several studies where CGE analysis provides insights to tourism researchers that could not be revealed using the standard I-O technique. The importance of CGE analysis for tourism policy analysis is highlighted. Methodology and Approach – The study reviews important contributions to CGE modelling in tourism contexts, including many of the authors publications Findings – The paper discusses applications of CGE modelling to tourism, identifying several areas where tourism analysis and policy have been suitably informed as a result of such modelling. Particular insights that CGE modelling has brought to tourism planning, forecasting and policy analysis are identified. Originality of the research – Due to its technical nature, tourism researchers are generally unaware of the advantages of CGE modelling compared to standard economic impact analysis I-O models. This study identifies and discuss the key reasons why CGE modelling should be accorded greater attention by governments and their agencies, consultants and researchers associated with tourism analysis and policy.

Suggested Citation

  • Larry Dwyer, 2015. "Computable general equilibrium modelling: an important tool for tourism policy analysis," Tourism and Hospitality Management, University of Rijeka, Faculty of Tourism and Hospitality Management, vol. 21(2), pages 111-126, December.
    • Handle: RePEc:tho:journl:v:21:y:2015:n:2:p:111-126
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    Citations

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    Cited by:

    1. Tomoru Hiramatsu, 2018. "Unequal regional impacts of high speed rail on the tourism industry: a simulation analysis of the effects of Kyushu Shinkansen," Transportation, Springer, vol. 45(2), pages 677-701, March.
    2. Onil Banerjee & Martin Cicowiez & Thomas Ochuodho & Michel Masozera & Bernabas Wolde & Pankaj Lal & Sebastian Dudek & Janaki R.R. Alavalapati, 2017. "Financing the Sustainable Management of Rwanda’s Protected Areas," CEDLAS, Working Papers 0211, CEDLAS, Universidad Nacional de La Plata.
    3. Tobias Mueller & Steven Gronau, 2023. "Fostering Macroeconomic Research on Hydrogen-Powered Aviation: A Systematic Literature Review on General Equilibrium Models," Energies, MDPI, vol. 16(3), pages 1-33, February.
    4. Niccolò Comerio & Fernanda Strozzi, 2019. "Tourism and its economic impact: A literature review using bibliometric tools," Tourism Economics, , vol. 25(1), pages 109-131, February.
    5. Cicowiez, Martín & Ordóñez, Romina, 2021. "The economic impacts of tourism-related private investment in Jamaica," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    6. Sun, Ya-Yen & Gossling, Stefan & Zhou, Wanru, 2022. "Does tourism increase or decrease carbon emissions? A systematic review," Annals of Tourism Research, Elsevier, vol. 97(C).
    7. Pham, Tien Duc & Dwyer, Larry & Su, Jen-Je & Ngo, Tramy, 2021. "COVID-19 impacts of inbound tourism on Australian economy," Annals of Tourism Research, Elsevier, vol. 88(C).
    8. Marcus Roller, 2023. "Estimation of direct net effects of events," Tourism Economics, , vol. 29(6), pages 1577-1597, September.
    9. Zhang, Jiekuan & Zhang, Yan, 2018. "Carbon tax, tourism CO2 emissions and economic welfare," Annals of Tourism Research, Elsevier, vol. 69(C), pages 18-30.
    10. Arshian Sharif & Subhan Ullah & Muhammad Shahbaz & Mantu Kumar Mahalik, 2021. "Sustainable tourism development and globalization: Recent insights from the United States," Sustainable Development, John Wiley & Sons, Ltd., vol. 29(5), pages 957-973, September.
    11. Leyi Zheng & Junfeng Liu & Qiong Yang & Yuqing Wang & Ying Liu & Xiurong Hu & Jianying Hu & Yi Wan & Xuejun Wang & Jianmin Ma & Xilong Wang & Shu Tao, 2023. "The Impacts of China’s Resident Tourism Subsidy Policy on the Economy and Air Pollution Emissions," Sustainability, MDPI, vol. 15(10), pages 1-16, May.
    12. Leroy de Morel, Laetitia & Wittwer, Glyn & Gamperle, Dion & Leung, Christina, 2020. "The potential local and regional impacts of COVID-19 in New Zealand with a focus on tourism," Conference papers 333207, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    13. Massiani, Jérôme, 2018. "Assessing the economic impact of mega events using Computable General Equilibrium models: Promises and compromises," Economic Modelling, Elsevier, vol. 75(C), pages 1-9.
    14. Andrés Artal-Tur & José Miguel Navarro-Azorín & José María Ramos-Parreño, 2020. "Measuring the economic contribution of tourism to destinations within an input-output framework: some methodological issues," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 19(3), pages 243-265, September.
    15. Silvia Emili & Federica Galli, 2023. "Spatial and cross-sectoral input spillover effects: the case of the Italian tourism industry," Journal of Productivity Analysis, Springer, vol. 59(3), pages 243-258, June.

    More about this item

    Keywords

    Economic impact analysis; computable general equilibrium modelling; tourism policy analysis;
    All these keywords.

    JEL classification:

    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism

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