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Tourism and Growth in European Countries: An Application of Likelihood-Based Panel Cointegration

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  • Felipa de Mello-Sampayo
  • Sofia de Sousa-Vale

Abstract

This paper applies likelihood-based panel cointegration techniques to examine the existence of a long run relationship between GDP, tourism earnings per tourist and total trade volume for a panel of European countries over the period 1988{2010. Removing the cross dependency, our panel tourism-led growth model indicates that tourism development has a higher impact on GDP in the North than in South European countries. The policy implication of this result is that for this group of countries, the best strategy is to raise tourism receipts. Furthermore, the volume of trade shows a signi cant and much more stronger e ect on the long run economic growth in our sample economies than tourism does. JEL Classi cation: F43; C33; L83

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Bibliographic Info

Paper provided by ISEG - School of Economics and Management, Department of Economics, University of Lisbon in its series Working Papers Department of Economics with number 2012/17.

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Date of creation: May 2012
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Handle: RePEc:ise:isegwp:wp172012

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Postal: Department of Economics, ISEG - School of Economics and Management, University of Lisbon, Rua do Quelhas 6, 1200-781 LISBON, PORTUGAL
Web page: https://aquila1.iseg.ulisboa.pt/aquila/departamentos/EC

Related research

Keywords: Tourism; Economic growth; Rank tests; Panel unit root tests; Panel cointegration;

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  1. Jacint Balaguer & Manuel Cantavella-Jorda, 2002. "Tourism as a long-run economic growth factor: the Spanish case," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 877-884.
  2. Rolf Larsson & Johan Lyhagen, 2000. "Likelihood-Based Inference in Multivariate Panel Cointegration Models," Econometric Society World Congress 2000 Contributed Papers 1313, Econometric Society.
  3. Moon, H.R.Hyungsik Roger & Perron, Benoit, 2004. "Testing for a unit root in panels with dynamic factors," Journal of Econometrics, Elsevier, vol. 122(1), pages 81-126, September.
  4. Salih Katircioglu, 2009. "Tourism, trade and growth: the case of Cyprus," Applied Economics, Taylor & Francis Journals, vol. 41(21), pages 2741-2750.
  5. Larsson, Rolf & Lyhagen, Johan & Löthgren, Mickael, 1998. "Likelihood-Based Cointegration Tests in Heterogeneous Panels," Working Paper Series in Economics and Finance 250, Stockholm School of Economics, revised 27 Aug 1998.
  6. Peter Pedroni, 2004. "Panel Cointegration: Asymptotic and Finite Sample Properties of Pooled Time Series Tests with an Application to the PPP Hypothesis," Department of Economics Working Papers 2004-15, Department of Economics, Williams College.
  7. Im, Kyung So & Pesaran, M. Hashem & Shin, Yongcheol, 2003. "Testing for unit roots in heterogeneous panels," Journal of Econometrics, Elsevier, vol. 115(1), pages 53-74, July.
  8. 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.
  9. 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.
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Cited by:
  1. B. Biagi & C. Detotto, 2010. "Crime as tourism externality," Working Paper CRENoS 201015, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  2. Mina Dragouni & George Filis & Nikolaos Antonakakis, 2013. "Time-Varying Interdependencies of Tourism and Economic Growth: Evidence from European Countries," FIW Working Paper series 128, FIW.
  3. João Sousa Andrade & Marta Simões & Adelaide Duarte, 2013. "Despesa Pública em Educação e Saúde e Crescimento Económico: Um Contributo para o Debate sobre as Funções Sociais do Estado," GEMF Working Papers 2013-18, GEMF - Faculdade de Economia, Universidade de Coimbra.

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